ATM - A2 Milk Corporation Limited

[Biscuit]

Yep, I thought I'd seen that announcement coming from a different company :): But yes - you are right, it is possible to do it, one just needs the right management forming and implementing the right strategy.

Can't be that hard, can it?

I think perhaps ATM are the opposite of Comvita's "end-to-end business model". ATM don't produce the milk, don't process the milk, and don't seem to have anyone connected to the market. They are disconnected at both ends.

[Beagle]

https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/financials/

[Baa_Baa]

I think perhaps ATM are the opposite of Comvita's "end-to-end business model". ATM don't produce the milk, don't process the milk, and don't seem to have anyone connected to the market. They are disconnected at both ends.

don't process the milk - I presume their 19% share of Synlait doesn't count? Or their pending acquisition of 70% of Mataura Valley Milk?

don't seem to have anyone connected to the market - what does that even mean? Dedicated sales forces in Australia/ANZ - $317m 1H21, dedicated sales force China - $326m 1H21, dedicated sales force USA - $34m H121.

[Baa_Baa]

https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/financials/

Thanks, interesting 'average' TP $8.01. No Sell reco's of the 8 analysts, 1 buy, 1 outperform, 4 hold, only 2 underperform.

[Biscuit]

don't process the milk - I presume their 19% share of Synlait doesn't count? Or their pending acquisition of 70% of Mataura Valley Milk?

don't seem to have anyone connected to the market - what does that even mean? Dedicated sales forces in Australia/ANZ - $317m 1H21, dedicated sales force China - $326m 1H21, dedicated sales force USA - $34m H121.


No, they don't currently process milk. I'd question how well they are connected to their market since they seem to have been completely blindsided by changes in their main route to market. My observation, as a holder, is that their "capital light" business model where they focus on the brand and are relatively hands-off at each end of the business, has been shown to lack resilience when things go pear-shaped. They are addressing that I think and that is IMO the right strategy even if it erodes margin and growth.

[Hoop]

ATM's chart currently looking the best it's been for a while (since its high one year ago). :):)

Currently RSI +ve (buy signal), trend behaviour changing?, DMI triggered a buy signal. These signals are new and for the conservatives
the price breaking the $7 resistance line will be the confirmation they want. If that confirmation happens it would give odds of 70% that the share price would continue to move higher (>5% increase), including a possible (50% chance) "throwback event" to retest the old $7.00 resistance line break (second chance buy in).

Disc: still watching but getting interested. ...

Currently $6.78 up +22c

[Leftfield]

Glad you posted that Hoop.... I've been thinking the same. Couple of nice gaps on the upside too.

Disc - holding LT, happy and not adding.

[BlackPeter]

Couple of points BP:

- the backward PE is irrelevant because it has $120m of stock tipped down the drain in it. If there's a "strong recovery in sales" how much more stock do you see them writing off in FY22?
- FY22 PE of around 27x does not factor in a strong recovery in sales...with consensus only recovering less then half the c. $500m sales deterioration in FY21 v FY20.

Maybe this is all a disagreement about the word strong. For me the market is cautiously pricing in only a mild c. 10-15% sales recovery in FY22. A strong recovery for me is more like a 25% sales recovery to $1.5b+ for FY22.

It is all very fluid because they either deliver a decent recovery or there are more systemic issues in the business than poor stock channel management.

Look - I think the difference between our views is that I am quite emotionally decoupled from the company. It does not make any difference to me, whether they shine or crash, but I do find them an interesting case study to learn from.

It feels that you might be quite committed - and this brings out the pink coloured glasses. Sure - the four downgrades and their ineptness to manage or understand their sales channel might be only a bad dream in a year from now, but it might be as well the start of a trend. Whatever it is - the world has clearly changed, and how well did they deal with the change last time? See.

Bad management and bad governance in my experience does not go away unless you actively do something about it.

Nothing wrong with pink coloured glasses in the right circumstances ... but for me and my money I think there are much safer bets for a reasonable return.

Why do you think ATM is a good company to invest in given all these uncertainties?

[Beagle]

Look - I think the difference between our views is that I am quite emotionally decoupled from the company. It does not make any difference to me, whether they shine or crash, but I do find them an interesting case study to learn from.

It feels that you might be quite committed - and this brings out the pink coloured glasses. Sure - the four downgrades and their ineptness to manage or understand their sales channel might be only a bad dream in a year from now, but it might be as well the start of a trend. Whatever it is - the world has clearly changed, and how well did they deal with the change last time? See.

Bad management and bad governance in my experience does not go away unless you actively do something about it.

Nothing wrong with pink coloured glasses in the right circumstances ... but for me and my money I think there are much safer bets for a reasonable return.

Why do you think ATM is a good company to invest in given all these uncertainties?

+1 Great post, well said. A forward PE of 27 is normally associated with a company with a well proven track record of growth without the major challenges you mentioned as well as many others ! In fact four years ago when it was growing REALLY strongly without all the current challenges it was on a forward PE of about 30.

[Arbroath]

Look - I think the difference between our views is that I am quite emotionally decoupled from the company. It does not make any difference to me, whether they shine or crash, but I do find them an interesting case study to learn from.

It feels that you might be quite committed - and this brings out the pink coloured glasses. Sure - the four downgrades and their ineptness to manage or understand their sales channel might be only a bad dream in a year from now, but it might be as well the start of a trend. Whatever it is - the world has clearly changed, and how well did they deal with the change last time? See.

Bad management and bad governance in my experience does not go away unless you actively do something about it.

Nothing wrong with pink coloured glasses in the right circumstances ... but for me and my money I think there are much safer bets for a reasonable return.

Why do you think ATM is a good company to invest in given all these uncertainties?

I’m not emotionally attached to it. I do own some at a $7.10 average but not overly bothered as it’s a small holding. On the contrary I think some posters here are behaving like they’ve been burned and want it to go to $2-3 to validate that they got out etc.

As I said at $6.50 given the growth they showed 2016-2020 and what’s happened I don’t think a “strong recovery” is priced in at all. Do you seriously think if a strong recovery in sales takes place over the next 6-12 months the share price will be around $6.50 because that’s all I was responding to from Beagle. Each to their own obviously but a strong recovery imho will see a much higher share price.
No guarantees of course as I said earlier.

[Beagle]

Average analyst projection is for 13% sales recovery in FY22 ($1,385m) and 16% in FY23 ($1,608m).
On top of that and more importantly they are forecasting EBITDA margin to improve from 11.65% this year to 19.7% in FY22 and 22.6% in FY23.
I think in tandem with the margin recovery most people would describe the above as a "strong" recovery and that's already baked into average expectations.

Only time will tell how much marketing spend ATM will need to incur to firstly stem market share losses and secondly build back to growth again but its very hard to turn a brand around and seldom cheap or quick.

If the Chinese Communist party keeps extoling the virtues of buying Chinese made the task ahead could be extremely challenging and one I wouldn't bet on with management's clearly displayed ineptitude. ATM's dependence on the Chinese market and the current hostile geopolitical situation are also front and central with my assessment of the challenges ATM faces and that's before we consider freight headwinds and antiquated inventory and reporting systems.

I have no axe to grind and no position either long or short...just calling it as I see it. To me with the downtrend still in place and challenging metrics and clear risks my dog's nose for a feed, (which is seldom wrong), says go chase rabbits elsewhere, this is too hard and slim pickings.

[dreamcatcher]

I have no axe to grind and no position either long or short...just calling it as I see it. To me with the downtrend still in place and challenging metrics and clear risks my dog's nose for a feed, (which is seldom wrong), says go chase rabbits elsewhere, this is too hard and slim pickings.

No axe to grind and no position............Maybe you should follow your own advice and go chase rabbits elsewhere ?

[Lease]

From China 618 mid-year sales festival, we can see A2 sales rank at No.4(last year was No.5). But hey the top three(Aptamil, Friso, Firmus) have broad range of IF products sale in China. If ranking "A2 only" IF sales, I'm pretty sure A2 will easily go on No.1.

So A2 IF is still one of the most popular brands in China. No worries:)

[Balance]

No axe to grind and no position............Maybe you should follow your own advice and go chase rabbits elsewhere ?


The fatal flaw @Balance is "You didn't buy any a2 three years ago around $3" Sp then on 19 Feb was >$11.00.

I see that dreamcatcher has learnt absolutely nothing from the multiple downgrades of ATM.

[aperitif]

http://pdf.dfcfw.com/pdf/H3_AP201909171361731160_1.pdf

This MVM acquisition is starting to make a lot of sense. I’m picking a strategic acquisition by a large Multinational July-Sep.

https://pillarsofwallstreet.com/wp-content/uploads/2013/02/8.14.14-Coke-to-Buy-Stake-in-Monster-Beverage-for-2.15B.pdf

[Beagle]

No axe to grind and no position............Maybe you should follow your own advice and go chase rabbits elsewhere ?

Precisely what I am doing. Today's posts were merely in response to Ruby asking me a few days ago what I thought of the current situation, see post #21988.

Do try and keep up, there's a good fellow :p

[Jiggs]

I'm just a newbie, and I rely on the computerised analysis of shares on websites.
Here's what they tell me about A2 Milk.

Website . . . . . . Av. value . . . . . . Advice . . . . . . Revenue growth
Yahoo . . . . . . .12.80 . . . . . . . Buy/hold
Reuters. . . . . . . . . . . . . . . . . . .Hold/sell . . . . . . in past -18%
Share Clarity. . . 10.02
SimplyWall.St . . 18.13 . . . . . . . . .. . .. . . . . . . . future +22.2%

Are there other (better?) websites that give information about NZ shares? These all sound very optimistic about ATM, but SimplyWallSt gives wildly optimistic valuations for lots of companies, and I've been bitten by buying A2 before, and SimplyWallSt also tells me that Colonial Motors, Hallensteins, Briscoes, Seeka, Skelerup, Marlin, the Warehouse and Wrightsons are all better value than A2, are more stable, and actually pay dividends, so I think I'll stick with some of them.

[kiora]

Jiggs try https://www.marketscreener.com/

[BlackPeter]

No axe to grind and no position............Maybe you should follow your own advice and go chase rabbits elsewhere ?

You mean you want to turn this into the cheerleaders thread? No facts, please and definitely no critical posts. Only direction for any share is upwards - right? Please only say things if they sound nice and fluffy ...

Thank you, but NO - Thank You. You might want to write nice and fluffy and cheerful posts ignoring reality to yourself, then you can catch and indulge as many dreams as you like :p - but please, don't interfere with a useful discussion on a public forum.

Obviously - you cold contribute, though ... why do you think an investment in ATM is at this time a good idea? How do you see the risks and potential rewards based on the companies fundamentals?

[JohnnyTheHorse]

Let's apply some technical analysis and see where we are at, what to be looking for and what the most likely scenarios are.

Monthly Chart: 12665
- Strong monthly downtrend
- Drop of ~75% from the peak
- No monthly low has yet been set (i.e. no monthly candle breaking above the peak of the previous one)
- Volume has climaxed the last two months, indicating large distribution
- Monthly RSI touched oversold

We can expect at some point that the monthly low will be set (monthly candle breaking above the peak of the previous one). We are setting up for this well at the end of this month, however ATM is a strong bear so we should not be trying to preempt this. If it does happen, after a drop of this size the most likely scenario is a monthly lower high. It would still be a potential monthly bear flag if it topped at anything below AU$10.50, so there's a huge range it can run and still be long term bearish. This must be kept in the back of your mind.

Weekly Chart: 12666
- We are still in a weekly downtrend (i.e. no weekly higher low and then higher high set)
- Weekly RSI has been massively oversold
- We are still below the weekly 12EMA (bearish)

This is the most important chart if you're looking for longer term entries. Based on the monthly chart, we know to be looking for that monthly bounce (to form a monthly lower high) at some point. For this to happen and have any follow through we ideally need to see the weekly trend change happen. At around current prices (AU$6.35) we are still a potentially weekly bear flag, so this doesn't present a good opportunity for entry at current levels. The bounce on weekly means little to me until we get that weekly trend change.

There are three scenarios to look for:

1. We set a weekly lower high at current prices and drop back and through previous lows to created another weekly bear flag (this has happened every other time. Traders will be looking for shorts around current levels (based on shorter timeframe charts) for this scenario to play out.

2. We set a weekly lower high at current levels, drop back down towards previous lows, however manage to set a weekly lower high, giving potential for a weekly trend change. The odds of this are significantly reduced if the weekly bounce tops in bear flag territory. In terms of actionable information, one looks to purchase on that weekly higher low and sets a stop below the previous low. This creates the ideal risk/reward position.

3. We rally higher ($AU6.85+) and then pull back to form that weekly higher low. If we rally to that level then we know odds are on to set a weekly higher low. So again, you are looking to buy the weekly higher low with a stop below. Near maximum potential reward, minimum potential risk.

Buying this weekly bounce right now for the longer term is a losing strategy. If you want evidence just look at all of the previous bounces.

Daily Chart: 12667
- We are in a daily uptrend (higher highs, higher lows). Remember that this means nothing in the big picture.
- We are in an uptrending channel
- We have resistance at AU$6.47 from a previous high. We should expect strong resistance in this area as it coincides with the top of the uptrending channel. Shorts will be looking to short this.
- We have a gap to fill around AU$6.85-7.00. Again if this does fill, expect heavy shorting to set that weekly lower high

At this point the daily chart is not useful for those looking to establish longer term positions. Shorter term traders will be looking for quick scalps if we get the gap fill, but at this point the shorters will be getting interested, with a weekly lower high being confirmed if we ideally get a daily down trend. There is heaps of trading opportunity on the daily and lower timeframe charts.

TLDR: unless you are a short term trader, look for that weekly higher low to be set before potential entry. If we the weekly higher low is set at the current level, be aware that there is a good chance we can drop to even lower lows. There's also risk that that if we get a weekly trend change, we may just form a monthly bear flag (fundamentals should determine this). Set yourself up in good risk/reward positions and be okay stopping out if it doesn't go your away.

I should also note that any entry comes with great risk due to fundamentals. Until the company provides further trading and strategy updates there is huge risk of gap up or downs. You can bet big money is monitoring this closely so we will likely see it in the charts before any formal update.

Happy to answer any questions or expand on concepts.

[davflaws]

Kia ora JTH
Thank you for that most informative post. What does TLDR mean?

[dreamcatcher]

You mean you want to turn this into the cheerleaders thread? No facts, please and definitely no critical posts. Only direction for any share is upwards - right? Please only say things if they sound nice and fluffy ...

Thank you, but NO - Thank You. You might want to write nice and fluffy and cheerful posts ignoring reality to yourself, then you can catch and indulge as many dreams as you like :p - but please, don't interfere with a useful discussion on a public forum.

Obviously - you cold contribute, though ... why do you think an investment in ATM is at this time a good idea? How do you see the risks and potential rewards based on the companies fundamentals?

Snappy today BP I only agreed with MrB suggestion "go chase rabbits elsewhere, this is too hard and slim pickings" .........While I am in the Buy camp where does that imply I wish to turn this into a cheerleadiers group but constant repeat views become boring.

For my own a2 experience I see a similarity with current SP which proved successful for me over last 4 years accumulating between high 3 - 7 Selling a few yearly now holding a fair sized parcel all free-held.

I see a positive future for a2 once Covid passes and world reopens but not without hicups

China/NZ positive
USA IF - possibility
Mataura Valley Milk - new products
Buy Back - likely
Take-over - probably rejected
UK/NZ - trade deal
618 & 11/11 sales

[dreamcatcher]

@JTH Thanks for the lesson

[aperitif]

A Sunday reading with poor weather around most of the country. Some interesting numbers!!!

https://www.yunzhan365.com/basic/45343576.html

(click the yellow box)

[Lease]

A Sunday reading with poor weather around most of the country. Some interesting numbers!!!

https://www.yunzhan365.com/basic/45343576.html

(click the yellow box)

Excellent information aperitif. So as per the study, China still have huge potential for A2 to penetrate:)

[RupertBear]

Let's apply some technical analysis and see where we are at, what to be looking for and what the most likely scenarios are.

Monthly Chart: 12665
- Strong monthly downtrend
- Drop of ~75% from the peak
- No monthly low has yet been set (i.e. no monthly candle breaking above the peak of the previous one)
- Volume has climaxed the last two months, indicating large distribution
- Monthly RSI touched oversold

We can expect at some point that the monthly low will be set (monthly candle breaking above the peak of the previous one). We are setting up for this well at the end of this month, however ATM is a strong bear so we should not be trying to preempt this. If it does happen, after a drop of this size the most likely scenario is a monthly lower high. It would still be a potential monthly bear flag if it topped at anything below AU$10.50, so there's a huge range it can run and still be long term bearish. This must be kept in the back of your mind.

Weekly Chart: 12666
- We are still in a weekly downtrend (i.e. no weekly higher low and then higher high set)
- Weekly RSI has been massively oversold
- We are still below the weekly 12EMA (bearish)

This is the most important chart if you're looking for longer term entries. Based on the monthly chart, we know to be looking for that monthly bounce (to form a monthly lower high) at some point. For this to happen and have any follow through we ideally need to see the weekly trend change happen. At around current prices (AU$6.35) we are still a potentially weekly bear flag, so this doesn't present a good opportunity for entry at current levels. The bounce on weekly means little to me until we get that weekly trend change.

There are three scenarios to look for:

1. We set a weekly lower high at current prices and drop back and through previous lows to created another weekly bear flag (this has happened every other time. Traders will be looking for shorts around current levels (based on shorter timeframe charts) for this scenario to play out.

2. We set a weekly lower high at current levels, drop back down towards previous lows, however manage to set a weekly lower high, giving potential for a weekly trend change. The odds of this are significantly reduced if the weekly bounce tops in bear flag territory. In terms of actionable information, one looks to purchase on that weekly higher low and sets a stop below the previous low. This creates the ideal risk/reward position.

3. We rally higher ($AU6.85+) and then pull back to form that weekly higher low. If we rally to that level then we know odds are on to set a weekly higher low. So again, you are looking to buy the weekly higher low with a stop below. Near maximum potential reward, minimum potential risk.

Buying this weekly bounce right now for the longer term is a losing strategy. If you want evidence just look at all of the previous bounces.

Daily Chart: 12667
- We are in a daily uptrend (higher highs, higher lows). Remember that this means nothing in the big picture.
- We are in an uptrending channel
- We have resistance at AU$6.47 from a previous high. We should expect strong resistance in this area as it coincides with the top of the uptrending channel. Shorts will be looking to short this.
- We have a gap to fill around AU$6.85-7.00. Again if this does fill, expect heavy shorting to set that weekly lower high

At this point the daily chart is not useful for those looking to establish longer term positions. Shorter term traders will be looking for quick scalps if we get the gap fill, but at this point the shorters will be getting interested, with a weekly lower high being confirmed if we ideally get a daily down trend. There is heaps of trading opportunity on the daily and lower timeframe charts.

TLDR: unless you are a short term trader, look for that weekly higher low to be set before potential entry. If we the weekly higher low is set at the current level, be aware that there is a good chance we can drop to even lower lows. There's also risk that that if we get a weekly trend change, we may just form a monthly bear flag (fundamentals should determine this). Set yourself up in good risk/reward positions and be okay stopping out if it doesn't go your away.

I should also note that any entry comes with great risk due to fundamentals. Until the company provides further trading and strategy updates there is huge risk of gap up or downs. You can bet big money is monitoring this closely so we will likely see it in the charts before any formal update.

Happy to answer any questions or expand on concepts.

fabulous post thanks Johnnythehorse :)

[Leftfield]

Exports of Milk Powder ex Lyttleton (per courtesy of Werdplaya on HC) YTD May 2021 v 2020 up 33% (by vol.)

Naysayers will say it's all discounted (and they may be right) but this, plus the TA chart turning more positive, are encouraging signs for this biased holder.

12676

That said, I agree with Johnnythehorse;

I should also note that any entry comes with great risk due to fundamentals. Until the company provides further trading and strategy updates there is huge risk of gap up or downs. You can bet big money is monitoring this closely so we will likely see it in the charts before any formal update.

[Maxtrade]

Thanks for the analysis JTH.

Still learning all this I guess, but I thought from looking at the charts it looks like there has been steadily weekly higher low's, and weekly higher high's since the end of May.

In regards to your comment...

Weekly Chart: A2M Weekly.jpg (https://www.sharetrader.co.nz/attachment.php?attachmentid=12666&d=1624672799)
- We are still in a weekly downtrend (i.e. no weekly higher low and then higher high set) ??

Can you explain how you see that on the chart as you are indicating. In my ignorance it looks like each week lately the SP has been having a higher low than the low of the previous week, and a higher high reached than the high of the previous week.

So isn't that then showing that the weekly trend has been increasing over the past ~ 5weeks ??



Thanks in advance



Let's apply some technical analysis and see where we are at, what to be looking for and what the most likely scenarios are.

Monthly Chart: 12665
- Strong monthly downtrend
- Drop of ~75% from the peak
- No monthly low has yet been set (i.e. no monthly candle breaking above the peak of the previous one)
- Volume has climaxed the last two months, indicating large distribution
- Monthly RSI touched oversold

We can expect at some point that the monthly low will be set (monthly candle breaking above the peak of the previous one). We are setting up for this well at the end of this month, however ATM is a strong bear so we should not be trying to preempt this. If it does happen, after a drop of this size the most likely scenario is a monthly lower high. It would still be a potential monthly bear flag if it topped at anything below AU$10.50, so there's a huge range it can run and still be long term bearish. This must be kept in the back of your mind.

Weekly Chart: 12666
- We are still in a weekly downtrend (i.e. no weekly higher low and then higher high set)
- Weekly RSI has been massively oversold
- We are still below the weekly 12EMA (bearish)

This is the most important chart if you're looking for longer term entries. Based on the monthly chart, we know to be looking for that monthly bounce (to form a monthly lower high) at some point. For this to happen and have any follow through we ideally need to see the weekly trend change happen. At around current prices (AU$6.35) we are still a potentially weekly bear flag, so this doesn't present a good opportunity for entry at current levels. The bounce on weekly means little to me until we get that weekly trend change.

There are three scenarios to look for:

1. We set a weekly lower high at current prices and drop back and through previous lows to created another weekly bear flag (this has happened every other time. Traders will be looking for shorts around current levels (based on shorter timeframe charts) for this scenario to play out.

2. We set a weekly lower high at current levels, drop back down towards previous lows, however manage to set a weekly lower high, giving potential for a weekly trend change. The odds of this are significantly reduced if the weekly bounce tops in bear flag territory. In terms of actionable information, one looks to purchase on that weekly higher low and sets a stop below the previous low. This creates the ideal risk/reward position.

3. We rally higher ($AU6.85+) and then pull back to form that weekly higher low. If we rally to that level then we know odds are on to set a weekly higher low. So again, you are looking to buy the weekly higher low with a stop below. Near maximum potential reward, minimum potential risk.

Buying this weekly bounce right now for the longer term is a losing strategy. If you want evidence just look at all of the previous bounces.

Daily Chart: 12667
- We are in a daily uptrend (higher highs, higher lows). Remember that this means nothing in the big picture.
- We are in an uptrending channel
- We have resistance at AU$6.47 from a previous high. We should expect strong resistance in this area as it coincides with the top of the uptrending channel. Shorts will be looking to short this.
- We have a gap to fill around AU$6.85-7.00. Again if this does fill, expect heavy shorting to set that weekly lower high

At this point the daily chart is not useful for those looking to establish longer term positions. Shorter term traders will be looking for quick scalps if we get the gap fill, but at this point the shorters will be getting interested, with a weekly lower high being confirmed if we ideally get a daily down trend. There is heaps of trading opportunity on the daily and lower timeframe charts.

TLDR: unless you are a short term trader, look for that weekly higher low to be set before potential entry. If we the weekly higher low is set at the current level, be aware that there is a good chance we can drop to even lower lows. There's also risk that that if we get a weekly trend change, we may just form a monthly bear flag (fundamentals should determine this). Set yourself up in good risk/reward positions and be okay stopping out if it doesn't go your away.

I should also note that any entry comes with great risk due to fundamentals. Until the company provides further trading and strategy updates there is huge risk of gap up or downs. You can bet big money is monitoring this closely so we will likely see it in the charts before any formal update.

Happy to answer any questions or expand on concepts.

[JohnnyTheHorse]

Thanks for the analysis JTH.

Still learning all this I guess, but I thought from looking at the charts it looks like there has been steadily weekly higher low's, and weekly higher high's since the end of May.

In regards to your comment...

Weekly Chart: A2M Weekly.jpg (https://www.sharetrader.co.nz/attachment.php?attachmentid=12666&d=1624672799)
- We are still in a weekly downtrend (i.e. no weekly higher low and then higher high set) ??

Can you explain how you see that on the chart as you are indicating. In my ignorance it looks like each week lately the SP has been having a higher low than the low of the previous week, and a higher high reached than the high of the previous week.

So isn't that then showing that the weekly trend has been increasing over the past ~ 5weeks ??



Thanks in advance

A good question Maxtrade. In the case of an uptrend, this can be defined as successively higher peaks and troughs (high lower, then higher highs). We haven't yet had a trough. To get a trough (higher low) we need to break down below the low of the previous weekly candle (which would currently mean breaking ~AU$5.90. After that, we would need to break through the previous weekly candle high to confirm the trend change. My rough drawing on that weekly chart shows what a confirmed trend change would look like. A trend change is far more significant than the price just going upwards. By holding the trough it gives a chance to prove that the balance has tilted to one side. Otherwise it would just be another relief rally in a weekly downtrend (as evidenced all the other times).

[aperitif]

"Trading is the ability to foretell what is going to happen tomorrow, next week, next month and next year. And to have the ability afterwards to explain why it didn't happen."

[JohnnyTheHorse]

"Trading is the ability to foretell what is going to happen tomorrow, next week, next month and next year. And to have the ability afterwards to explain why it didn't happen."

No trader who knows what they're doing will make any claim that they can predict what is going to happen. A skilled trader looks at probabilities of scenarios playing out then places themselves in favourable risk/reward situations based on this.

[Maxtrade]

A good question Maxtrade. In the case of an uptrend, this can be defined as successively higher peaks and troughs (high lower, then higher highs). We haven't yet had a trough. To get a trough (higher low) we need to break down below the low of the previous weekly candle (which would currently mean breaking ~AU$5.90. After that, we would need to break through the previous weekly candle high to confirm the trend change. My rough drawing on that weekly chart shows what a confirmed trend change would look like. A trend change is far more significant than the price just going upwards. By holding the trough it gives a chance to prove that the balance has tilted to one side. Otherwise it would just be another relief rally in a weekly downtrend (as evidenced all the other times).

Thanks again JTH

Wasn't a trough observed 19th May then 27th May.
27th of May low being fractionally higher than 19th of May low. Am I understanding correctly, if so doesn't that show a trough, with an up trend forming and following since then.

If the 12 wk EMA breaks which looks pretty close? Then wouldn't a lot of traders be set ready to up their portfolio's. If shorters come in just below the EMA around 6.4 AUD they would also be taking a high risk as if the SP does push past the 12wk EMA, the SP could quite quickly rise from there, catching shorters with their pants down. In turn driving the SP higher when they would need to buy back in, and potentially start pushing the SP up through gap zones. Effectively if shorters are aiming to see the current 12wk EMA as a signal for them to enter, then wouldn't they likely get caught out like with the meme stocks when their options are called if the market pushes past $7 and starts recovering gap zones. That is if May 19th/May 27th was indeed the bottom trough.

[JohnnyTheHorse]

Thanks again JTH

Wasn't a trough observed 19th May then 27th May.
27th of May low being fractionally higher than 19th of May low. Am I understanding correctly, if so doesn't that show a trough, with an up trend forming and following since then.

If the 12 wk EMA breaks which looks pretty close? Then wouldn't a lot of traders be set ready to up their portfolio's. If shorters come in just below the EMA around 6.4 AUD they would also be taking a high risk as if the SP does push past the 12wk EMA, the SP could quite quickly rise from there, catching shorters with their pants down. In turn driving the SP higher when they would need to buy back in, and potentially start pushing the SP up through gap zones. Effectively if shorters are aiming to see the current 12wk EMA as a signal for them to enter, then wouldn't they likely get caught out like with the meme stocks when their options are called if the market pushes past $7 and starts recovering gap zones. That is if May 19th/May 27th was indeed the bottom trough.

Yes that is a daily trough leading to a daily trend change. We are looking for a weekly trough and trend change (i.e. each candle on the chart is the period of one week). So it obviously takes weeks to play out at minimum.

Don't expect any 'meme' stock type action as the percentage of shorts is comparatively quite low (~6%). Plenty of bagholders who will be looking for any opportunity to sell at higher prices that shorters can cover into.

[aperitif]

Hema stores now selling stages 1-4 English label via Singapore warehouse, to mitigate daigou. Check out how advance these stores are.

https://www.indigo9digital.com/blog/futureofretailalibaba (https://www.indigo9digital.com/blog/futureofretailalibaba)

12687

[Sideshow Bob]

Nestle developments with some comments re birth rate.

Stage-four formulas: Nestle China expands portfolio with partially hydrolysed and A2 milk formulas (nutraingredients-asia.com) (https://www.nutraingredients-asia.com/Article/2021/06/29/Stage-four-formulas-Nestle-China-expands-portfolio-with-partially-hydrolysed-and-A2-milk-formulas?utm_source=newsletter_daily&utm_medium=email&utm_campaign=30-Jun-2021&cid=DM971039&bid=1634763708)

[Leftfield]

Some team substitutions being made...... looking good. (https://www.nzx.com/announcements/374990)

TA on the mend....

12697

However, Shorts increasing...

12698

So some positives..... some negatives...

Take care.

[dreamcatcher]

Some team substitutions being made...... looking good. (https://www.nzx.com/announcements/374990)

TA on the mend....

12697

However, Shorts increasing...

12698

So some positives..... some negatives...

Take care.

Edith Bailey looks a great choice as Chief Marketing Officer with plenty of insider information from Danone Nutricia’s Specialised Nutrition division.

Thanks for the charts

[Leftfield]

Agree... the new appointment looks very good, great CV. I also like that Janelle Tong is being groomed for higher roles.

Edith will commence in her role later in 2021, with her start date yet to be confirmed. In the meantime, we are pleased to confirm that Janelle Tong, a2MC’s Group Head of Marketing will take up the role of Interim Chief Marketing Officer and join the Executive Leadership Team until Edith commences in her role later this year.

[Leftfield]

Agree... the new appointment looks very good, great CV. I also like that Janelle Tong is being groomed for higher roles.

Edith will commence in her role later in 2021, with her start date yet to be confirmed. In the meantime, we are pleased to confirm that Janelle Tong, a2MC’s Group Head of Marketing will take up the role of Interim Chief Marketing Officer and join the Executive Leadership Team until Edith commences in her role later this year.

[aperitif]

https://youtu.be/i0_4sw5cz5s

[sb9]

Edith Bailey looks a great choice as Chief Marketing Officer with plenty of insider information from Danone Nutricia’s Specialised Nutrition division.

Thanks for the charts

Really superb appointment by DB. I think DB is really getting upto speed with business now and A2 could well be the one to watch for FY22.

[winner69]

Really superb appointment by DB. I think DB is really getting upto speed with business now and A2 could well be the one to watch for FY22.

Can’t wait for DB’s big strategy / pathway to riches presentation

[Leftfield]

Can’t wait for DB’s big strategy / pathway to riches presentation

Well the market isn't waiting Winner...... it likes the unfolding story and closed a tab over $7.00. Up 38c for the day.

Onwards and upwards no worries.

[alokdhir]

With 30th June past so its certain now that no further downgrades coming and ATM meeting its revised full year guidance .

That got celebrated by 5.7% jump

Most likely worst is over but me not interested in ATM anymore ...its SP is a casino ...IMHO ...lol

[Balance]

https://www.fool.com.au/2021/07/02/top-broker-tips-a2-milk-asxa2m-share-price-to-jump-37/amp/

Bell Porter reaffirms price target & highlights positive export volume trend.

[winner69]

https://www.fool.com.au/2021/07/02/top-broker-tips-a2-milk-asxa2m-share-price-to-jump-37/amp/

Bell Porter reaffirms price target & highlights positive export volume trend.

A2 definitely over the worst of its issue

All good going forward from here

Share price could possibly be 10 bucks by announcement time late August

[Leftfield]

Crikey.... do I detect optimism on the ATM thread!?

Scary.

[steveb]

With 30th June past so its certain now that no further downgrades coming and ATM meeting its revised full year guidance .

That got celebrated by 5.7% jump

Most likely worst is over but me not interested in ATM anymore ...its SP is a casino ...IMHO ...lol

Could well be that with june 30th past this little surge could be aussies who have sold before the end of their financial year (june 30) and realised their losses,and are now buying back in with a clean slate.

[Baa_Baa]

Crikey.... do I detect optimism on the ATM thread!?

Scary.

There's room for some cautious optimism imo.

The ATM chart (https://invst.ly/vbocs) log scale daily (and A2M) has over 6 weeks now of a rising SP within a nice rising channel pattern, that's 29% or $1.59 gain off the low already.

The encouraging recent TA is the repeated back tests of 21EMA, then Friday boost up through and close above the 50EMA within the price gap from the fourth down grade.

100EMA at $8.12 is next short term target (50% up from the low) - whose going to wait that long to get a piece of the action.

That said, this is all still within a truely ugly overall down trend and there are more resistance levels, gaps and MA's above here than you can shake a stick at.

[Leftfield]

ATM's acquisition on 75% Mataura Valley Milk now approved by OIO and will be finalised end July.
https://www.nzx.com/announcements/375065

Crikey - more optimism.

[JohnnyTheHorse]

ATM's acquisition on 75% Mataura Valley Milk now approved by OIO and will be finalised end July.
https://www.nzx.com/announcements/375065

Crikey - more optimism.

Honestly I'm on the fence as to whether this acquisition is a good move. Manufacturing is a VERY different skillset than what they currently have and adds a bunch of complexity when the business is already in a mess. Really critical they have the right people leading it or it won't go well.

[Leftfield]

Honestly I'm on the fence as to whether this acquisition is a good move. Manufacturing is a VERY different skillset than what they currently have and adds a bunch of complexity when the business is already in a mess. Really critical they have the right people leading it or it won't go well.

I was a fan of their 'capital light' approach. However, while not without risks, this acquisition ticks a lot of boxes for me. Their statement covers the key benefits.

The proposed acquisition will provide the opportunity for a2MC to participate in nutritional products manufacturing, provides supplier and geographic diversification, and strengthens our relationship with key partners in China.

Comes a time when we have to trust managers and directors to do their stuff and you can bet Bortolussi went over it carefully before he put his name to it.

[BlackPeter]

ATM's acquisition on 75% Mataura Valley Milk now approved by OIO and will be finalised end July.
https://www.nzx.com/announcements/375065

Crikey - more optimism.

Interesting - so, how exactly does this acquisition fix the problems which brought them into the current doldrums? Their problem was never supply or manufacturing, but it was sales and marketing. This acquisition just adds to their current problems a totally new field of issues and brings them closer to the problems they inflicted on Synlait.


Honestly I'm on the fence as to whether this acquisition is a good move. Manufacturing is a VERY different skillset than what they currently have and adds a bunch of complexity when the business is already in a mess. Really critical they have the right people leading it or it won't go well.

Absolutely agree - and as indicated above, given their problems are in sales and marketing it is quite mindboggling that they now invest into the areas where they don't have issues in.

[winner69]

Bit of a worry they heading down a Fonterra-like path

[Maxtrade]

Honestly I'm on the fence as to whether this acquisition is a good move. Manufacturing is a VERY different skillset than what they currently have and adds a bunch of complexity when the business is already in a mess. Really critical they have the right people leading it or it won't go well.

JTH,

So far you are exactly on point. Your chart that you predicted is following exactly how you saw it playing out.

https://www.sharetrader.co.nz/attachment.php?attachmentid=12666&d=1624672799

Thank you for your guidance and information. I suspect from what we are now seeing today, which is in line with your chart prediction, there will be a turnaround at 7.25 NZD (6.75 AUD), followed by a steady decline. (7.25 NZD is right on 0.5 on the fibonacci for the turn around). Now I understand what you were referring to, with seeing where the next drop will bottom out to see if the trough is formed then.

Am I understanding correctly now?

However if pushes past this 6.75AUD level then would that indicate the trough was as I had indicated in May?


Thanks again

[Hoop]

There's room for some cautious optimism imo.

The ATM chart (https://invst.ly/vbocs) log scale daily (and A2M) has over 6 weeks now of a rising SP within a nice rising channel pattern, that's 29% or $1.59 gain off the low already.

The encouraging recent TA is the repeated back tests of 21EMA, then Friday boost up through and close above the 50EMA within the price gap from the fourth down grade.

100EMA at $8.12 is next short term target (50% up from the low) - whose going to wait that long to get a piece of the action.

That said, this is all still within a truely ugly overall down trend and there are more resistance levels, gaps and MA's above here than you can shake a stick at.

Yes lots of resistances...but short term there is a gap vacumm being filled as I type. This vacumm theory suggests a rapid rise from $7.00 to 7.50 and it seems to be happening now. that suggests technically (TA chart) the primary downtrend line (green) has been broken...The DOW theory is lagging and suggests the downtrend is still going and will not end until we see a higher high and a higher low pricing.

This primary broadening downtrend channel (TA chart) ends when the price is above $7.00. The primary trend line is the last major confirmation as many major indicators have already triggered buy signals...

Today the primary trend line broke...
Disc: purchased small parcels of ATM a few minutes ago at $7.24.

12710

[Hoop]

Dammm...Missed topping up on the 12.01pm throwback :mad ;:

[Leftfield]

Dammm...Missed topping up on the 12.01pm throwback :mad ;:

Appreciate your posts (and charts) Hoop. Thanks.

My freeholding happy to feel the love.

[JohnnyTheHorse]

JTH,

So far you are exactly on point. Your chart that you predicted is following exactly how you saw it playing out.

https://www.sharetrader.co.nz/attachment.php?attachmentid=12666&d=1624672799

Thank you for your guidance and information. I suspect from what we are now seeing today, which is in line with your chart prediction, there will be a turnaround at 7.25 NZD (6.75 AUD), followed by a steady decline. (7.25 NZD is right on 0.5 on the fibonacci for the turn around). Now I understand what you were referring to, with seeing where the next drop will bottom out to see if the trough is formed then.

Am I understanding correctly now?

However if pushes past this 6.75AUD level then would that indicate the trough was as I had indicated in May?


Thanks again

That AU$6.80-7.00 range is the key area to now be watching for a reversal. From that reversal though the bias will now be looking for a weekly higher lower and weekly trend change. If it breaks through $7.00 the shorts could be under some real pressure and we could see some interesting moves.

Still not interested in establishing a longer swing position until we get a weekly higher low to ensure I have a close stop (although I am day trading this aggressively!)

[JohnnyTheHorse]

Winner69, I hope the price manages to recover into the close or it could be setting up for one of those abandoned babies :scared:

[winner69]

Winner69, I hope the price manages to recover into the close or it could be setting up for one of those abandoned babies :scared:

Jeez …..I’ll keep my fingers crossed. …..for it not too happen

[winner69]

Winner69, I hope the price manages to recover into the close or it could be setting up for one of those abandoned babies :scared:

No abandoned baby was there?

[JohnnyTheHorse]

No abandoned baby was there?

Will have to wait and see if ASX gaps down on open tomorrow.

[JohnnyTheHorse]

Will have to wait and see if ASX gaps down on open tomorrow.

Based on current depth doesn't look like the Aussie's are going to abandon the baby. What a relief.

I'm looking for an hourly lower high to short in the first 30 mins of ASX open, leading to at least daily consolidation. Let's see...

[Hoop]

Dammm...Missed topping up on the 12.01pm throwback :mad ;:

Missed out on yesterdays Ozzie opening weakness ..but not today :) .. Accumulated more today at $7.12 on Ozzie opening weakness...
Current price $nz7.10c

[Hoop]

Based on current depth doesn't look like the Aussie's are going to abandon the baby. What a relief.

I'm looking for an hourly lower high to short in the first 30 mins of ASX open, leading to at least daily consolidation. Let's see...
well done
Seems to be a pattern emerging at the moment NZ bullish OZ bearish..before mid-day seems good for a shorting play.
Probably should but I don't play the shorting game.. It seems many are, maybe the reason for these mid-day slumpings.

Dont you think it's a little bit dangerous playing the game with ATM...as it is in a short/medium term rally mode.

[JohnnyTheHorse]

well done
Seems to be a pattern emerging at the moment NZ bullish OZ bearish..before mid-day seems good for a shorting play.
Probably should but I don't play the shorting game..

Dont you think it's a little bit dangerous playing the game with ATM...as it is in a short/medium term rally mode.

Only short term with this one - looking for daily higher low. Covered about 1/3rd at hourly support (AU$6.65) so now sitting risk free on the rest. Prime spot for a weekly top to be set too before we (potentially) get that weekly trend change).

[Hoop]

Only short term with this one - looking for daily higher low. Covered about 1/3rd at hourly support (AU$6.65) so now sitting risk free on the rest. Prime spot for a weekly top to be set too before we (potentially) get that weekly trend change).
Well Done:D

[Sideshow Bob]

Farmers Weekly article on the new hire

A2 Milk appoints new chief marketing officer | Farmers Weekly (https://farmersweekly.co.nz/section/dairy/view/a2-milk-appoints-new-chief-marketing-officer)

[Leftfield]

Guru TA guy, Hoots on HC reckons ATM now above 50day EMA and has filled the gap caused by the last downgrade.

Here's his chart FYI..... note it is in $A.

12722

Next upwards gap in our sights.

[Lease]

More positive news: A2 Tmall English label unit sale price has gone up.

I have been following A2 Tmall sales for the last a couple of months. Previously the price was around RMB 210. Although some shops still sale at lower price, this is the first time I have seen the product unit sale price go up over the last a couple months.

[JohnnyTheHorse]

Covered an additional 1/3rd yesterday on that hourly trend change back bullish and stopped out of the rest today. Showing very notable strength now. I think shorts will be starting to sweat and should provide support on the downside. Next real resistance is ~AU$7.50, at which point we'd probably be at daily overbought conditions too.

[Hoop]

Guru TA guy, Hoots on HC reckons ATM now above 50day EMA and has filled the gap caused by the last downgrade.
[Au Chart]
Next upwards gap in our sights.
Market Physics at work :)
Yes the $A6 - $A7 gap is filled on the AU:A2M chart when the price returns to $A7.00. I see it had traded above 7 then fell back a few cents (due to the top of the gap being a resistance point). Having that pause was something to watch out for because the price traveling upwards through the gap vacuum requires little momentum energy..The proof of the pudding is ..has it got enough momentum to carry on upward after the vacuum?? That answer came about an hour ago when A2M got its second wind and broke through that gap resistance ($A7.00) and is currently as I type it is $A7.11 +42c +6.37%). Price carrying on after filling the gap proves A2M today had indeed got good upward momentum (very bullish sign).

The NZ:ATM ($NZ7.43 +27c +3.8%) did not not quite fill the gap as the NZ exchange closed for the day before the A2M got it's second wind..

Both A2M and ATM broke above their EMA50 on Friday the 2nd July (a buy signal).

On the NZ chart there are some resistance levels at $NZ8..$NZ9...and the next Gap at $NZ10 - 11....NOTE: how the price resistances are very psychologically based. We must be emotional people when it comes to trading Milk...eh ;)

[RupertBear]

Market Physics at work :)
Yes the $A6 - $A7 gap is filled on the AU:A2M chart when the price returns to $A7.00. I see it had traded above 7 then fell back a few cents (due to the top of the gap being a resistance point). Having that pause was something to watch out for because the price traveling upwards through the gap vacuum requires little momentum energy..The proof of the pudding is ..has it got enough momentum to carry on upward after the vacuum?? That answer came about an hour ago when A2M got its second wind and broke through that gap resistance ($A7.00) and is currently as I type it is $A7.11 +42c +6.37%). Price carrying on after filling the gap proves A2M today had indeed got good upward momentum (very bullish sign).

The NZ:ATM ($NZ7.43 +27c +3.8%) did not not quite fill the gap as the NZ exchange closed for the day before the A2M got it's second wind..

Both A2M and ATM broke above their EMA50 on Friday the 2nd July (a buy signal).

On the NZ chart there are some resistance levels at $NZ8..$NZ9...and the next Gap at $NZ10 - 11....NOTE: how the resistances are very psychologically based. We must be emotional people when it comes to trading Milk...eh ;)

Thanks Hoop, love your posts :)

[Leftfield]

Thanks Hoop - you can be the NZ TA Guru any day :t_up:

[JohnnyTheHorse]

ASX consolidating before breaking out to new highs and close near highs at end of day suggests another strong day is likely. The ASX close was equivalent of NZ$7.56.

[Maxtrade]

JTH,

So far you are exactly on point. Your chart that you predicted is following exactly how you saw it playing out.

https://www.sharetrader.co.nz/attachment.php?attachmentid=12666&d=1624672799

Thank you for your guidance and information. I suspect from what we are now seeing today, which is in line with your chart prediction, there will be a turnaround at 7.25 NZD (6.75 AUD), followed by a steady decline. (7.25 NZD is right on 0.5 on the fibonacci for the turn around). Now I understand what you were referring to, with seeing where the next drop will bottom out to see if the trough is formed then.

Am I understanding correctly now?

However if pushes past this 6.75AUD level then would that indicate the trough was as I had indicated in May?


Thanks again

At this point would it be fair enough to say now that it looks like it was the trough May 19th then May 26th. Didn't get a pull back to another low once hit 7.25NZD as the chart you had previously posted indicated may happen. Therefore can we deduce that the bottom trough formed end of may and now looks like a steady rally kicking in here on up.

The difficult part is sitting on the sideline seeing a 36% recovery rally already happen and not capitalising on it due to uncertainty on if there was going to be a second drop in SP. Which doesn't look like it is going to happen now.

Thanks again for feedback

[Beagle]

Good for traders. From an investors point of view the 100 day moving average looks like just on $7.95 and a sustained break up through that may signal a definitive change of momentum but from a FA point of view we really need to see their annual result and any outlook comments before any real degree of comfort can be taken that this really is investable again.

[Maxtrade]

Good for traders. From an investors point of view the 100 day moving average looks like just on $7.95 and a sustained break up through that may signal a definitive change of momentum but from a FA point of view we really need to see their annual result and any outlook comments before any real degree of comfort can be taken that this really is investable again.
Very true beagle. The strange thing now is with how many new retail traders there seems to be since Covid. People looking to put their money to work in a low interest environment. Value investors seem to be moving Sp's more on trading rather than company fundamentals. If it was purely based on company strength then ATM shouldn't be rallying yet, however it seems to be because people are trading trends more than reality. Air New Zealand it's another prime example of this currently. Where the SP should be dropping much lower yet the resistance of value investors seeing current SP as low seems to be propping the SP up. Air NZ can keep saying more and more negative news, with a share dilution on the way and no profits in sight, yet the SP still is bound in the current range due to retail investors seeing the current SP as being historically low.

FOMO I guess is kicking in for ATM. Similarly myself where I mentioned seeing a 36% gain pass by already while sitting on the sidelines waiting for reassurance we are above 12EMA etc before rebuying. If simply based off current trends it seems to be in bull territory.

[Baa_Baa]

Good for traders. From an investors point of view the 100 day moving average looks like just on $7.95 and a sustained break up through that may signal a definitive change of momentum but from a FA point of view we really need to see their annual result and any outlook comments before any real degree of comfort can be taken that this really is investable again.

There are a lot more of these types of articles (https://www.livewiremarkets.com/wires/sour-milk-now-tasting-sweeter) and broker upgrades emerging in the past few weeks, note the focus on fundamentals and finding a balance for individual risk tolerance / rewards. No mention of chart technicals, but they've bought in.

[Beagle]

Thanks for sharing Baa Baa. Good article and food for thought. https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/financials/
Average broker forecast for FY22 is 25 cps on sales recovering to $1,387m and EBITDA margin of 20%.
At $7.68 that puts them on a FY22 forward PE of 31...more or less the same when Geoff Babbidge was running it many years ago and it was growing really strongly.

My thoughts are that Covid variants will dog us for many many years and the CCP will get increasingly forthright in pushing buy Chinese made. Are these risks factored into the current share price with that forward PE ?

I think there's a lot of people jumping on board this as a momentum trade. With no forecast dividend from an investment point of view taking into account the risks I am dubious that the above analysts average forecast supports a share price materially higher than the current one. If I'm wrong I'm okay with that and good luck to shareholders.

[44wishlists]

Nowadays there is something called A3 milk.

https://www.ourstruly.co.nz/shop/organic-milk
https://www.ruralnewsgroup.co.nz/dairy-news/dairy-general-news/organic-farmers-launch-own-brand-of-a3-milk
https://www.a3organic.co.nz/home/

[JohnnyTheHorse]

At this point would it be fair enough to say now that it looks like it was the trough May 19th then May 26th. Didn't get a pull back to another low once hit 7.25NZD as the chart you had previously posted indicated may happen. Therefore can we deduce that the bottom trough formed end of may and now looks like a steady rally kicking in here on up.

The difficult part is sitting on the sideline seeing a 36% recovery rally already happen and not capitalising on it due to uncertainty on if there was going to be a second drop in SP. Which doesn't look like it is going to happen now.

Thanks again for feedback

Sounds like FOMO kicking in :eek2:

The issues I have with buying in at current levels:

1. This is still just a counter rally in a monthly downtrend. A drop below previous lows is an entirely possible scenario (albeit less probable now).
2. The weekly trend has not changed. I do not trust a rally without a trend change. Increases chance of just a bear flag forming.
3. Where would you place your stoploss if you bought at these levels? Below previous lows risking ~40%?

In my view people should only be buying at these levels if they have information that the fundamental picture has favorably changed, or they are trading on shorter term timeframes. The million dollar question is whether this is being driven by that fundamental change or whether its a momentum trade and pressure on shorts.

[BlackPeter]

There are a lot more of these types of articles (https://www.livewiremarkets.com/wires/sour-milk-now-tasting-sweeter) and broker upgrades emerging in the past few weeks, note the focus on fundamentals and finding a balance for individual risk tolerance / rewards. No mention of chart technicals, but they've bought in.


Thanks for sharing Baa Baa. Good article and food for thought. https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/financials/
Average broker forecast for FY22 is 25 cps on sales recovering to $1,387m and EBITDA margin of 20%.
At $7.68 that puts them on a FY22 forward PE of 31...more or less the same when Geoff Babbidge was running it many years ago and it was growing really strongly.

My thoughts are that Covid variants will dog us for many many years and the CCP will get increasingly forthright in pushing buy Chinese made. Are these risks factored into the current share price with that forward PE ?

I think there's a lot of people jumping on board this as a momentum trade. With no forecast dividend from an investment point of view taking into account the risks I am dubious that the above analysts average forecast supports a share price materially higher than the current one. If I'm wrong I'm okay with that and good luck to shareholders.


Sounds like FOMO kicking in :eek2:

The issues I have with buying in at current levels:

1. This is still just a counter rally in a monthly downtrend. A drop below previous lows is an entirely possible scenario (albeit less probable now).
2. The weekly trend has not changed. I do not trust a rally without a trend change. Increases chance of just a bear flag forming.
3. Where would you place your stoploss if you bought at these levels? Below previous lows risking ~40%?

In my view people should only be buying at these levels if they have information that the fundamental picture has favorably changed, or they are trading on shorter term timeframes. The million dollar question is whether this is being driven by that fundamental change or whether its a momentum trade and pressure on shorts.

Great posts - sharetrader at its finest (If we forget about the server issues :)).

I agree, the upwards pressure looks at this stage more like shorts closing and the AIR / FOMO crowd flowing in. I guess they need to chase something else after Gamestop and Hertz didn't work out, don't they?

From a fundamental perspective is ATM at these prices only a buy if it manages to return to pre Covid growth rates ... and so far I would not know why people expect that to happen. Baa_baa's link leads to a balanced analysis (worthwhile reading), pointing out risks as well as opportunities. So far I don't think however that anybody can predict how the dice will fall.

Anyway - I am sure our professional momentum traders will be dancing close enough to the exit ... it is just the mum & dad investors I am worried about.

[Sideshow Bob]

Nowadays there is something called A3 milk.

https://www.ourstruly.co.nz/shop/organic-milk
https://www.ruralnewsgroup.co.nz/dairy-news/dairy-general-news/organic-farmers-launch-own-brand-of-a3-milk
https://www.a3organic.co.nz/home/

You'd think they'd come up with something original, rather than just try to take the value others have created.

[see weed]

Nowadays there is something called A3 milk.

https://www.ourstruly.co.nz/shop/organic-milk
https://www.ruralnewsgroup.co.nz/dairy-news/dairy-general-news/organic-farmers-launch-own-brand-of-a3-milk
https://www.a3organic.co.nz/home/
They forgot to mention the a1 in the organic milk.

[Snoopy]

They forgot to mention the a1 in the organic milk.


No they didn't. From the last A3 link:

https://www.a3organic.co.nz/home/

-------

What is A3™?

A3™ = A2 Beta-casein cow’s milk + USDA/NOP organic certified.

----------

You are correct See weed in that organic milk can contain the A1 protein. But it isn't in the so called 'A3' organic milk.

SNOOPY

[see weed]

No they didn't. From the last A3 link:

https://www.a3organic.co.nz/home/

-------

What is A3™?

A3™ = A2 Beta-casein cow’s milk + USDA/NOP organic certified.

----------

You are correct See weed in that organic milk can contain the A1 protein. But it isn't in the so called 'A3' organic milk.

SNOOPY
Does that mean all their organic cows are a2 certified?

[Balance]

A2 getting some love from brokers and fund managers as well in recent days.

Watermark Funds Management chief investment officer Justin Braitling singled out A2 shares as “a strong buy”.

And last week, Bell Potter’s issued a ‘buy’ recommendation for A2, complete with a 12-month price target of $8.50.

[BlackPeter]

A2 getting some love from brokers and fund managers as well in recent days.

Watermark Funds Management chief investment officer Justin Braitling singled out A2 shares as “a strong buy”.

And last week, Bell Potter’s issued a ‘buy’ recommendation for A2, complete with a 12-month price target of $8.50.

Well, well - in June 2020 the broker consensus for ATM was NZ$18.97 per share. Share actually traded in June 2021 for less than $7.

Always good to validate the quality of broker recommendations. Oops - is this an oxymoron?

[Snoopy]

Does that mean all their organic cows are a2 certified?

That's how I read it, yes.

SNOOPY

[winner69]

A2 top of Direct Broking's net buy list (buy orders less sell orders) last week

Up from 7 the week before -- so more punters keen on A2


Momentum building - 8 bucks next week

[Lease]

If results are a little better than expected next month, SP will pass $10 mark, haha.

[silverblizzard888]

This is all I needed to start backing up the truck:

"Despite the current challenges being faced, the Board is confident in the strength of the brand, the underlying fundamentals of the business, and the Company’s long-term growth potential.

The Board is actively reviewing capital management initiatives, including a potential share buy-back. An update will be provided at the full year results in August."

August will be a creamy month

[Sideshow Bob]

Executive Leadership Team Appointments - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/375447)

12/7/2021, 8:30 amADMINThe a2 Milk Company (“the Company”, “a2MC”) is pleased to announce the appointment of two new members to the Executive Leadership Team following the recent resignation of Peter Nathan, Chief Executive – Asia Pacific.

The Asia Pacific division which comprises the vast majority of a2MC’s business, will be reorganised into three business units to provide more dedicated focus on its key components being: China domestic business; International export business; and Australia & New Zealand (ANZ) domestic business.

Xiao Li, Chief Executive – Greater China, will become a direct report to David Bortolussi, Managing Director and CEO, and continue to be responsible for the Company’s China label infant milk formula (IMF) and other domestic business. Two new leadership roles are being created with responsibility for International and ANZ.

Executive General Manager – International

Yohan Senaratne will join the Company in the role of Executive General Manager – International, reporting to the Managing Director and CEO. Yohan will be responsible for leading the Company’s cross-border export business, primarily focused on English label IMF products manufactured in New Zealand and sold into China, but also including liquid milk and other nutritional products. Importantly, the International team will be responsible for managing English label IMF products sold through all channels, principally via the daigou/reseller and cross-border eCommerce (CBEC) channels. The International team will also be responsible for developing the Company’s business in emerging markets.

Yohan brings capability in strategy, marketing, sales and eCommerce, and experience in IMF and adjacent categories in China. Yohan will join a2MC from his most recent role as Sales and Marketing Director at Bellamy’s Organic, where he played an instrumental role in the transformation and relaunch of the IMF and baby food brand across China, Australia and South-East Asia. Yohan has also held multiple roles at Mondelez International, including Head of eCommerce for Australia, New Zealand and Japan. Prior to this, Yohan worked at ANZ Bank focusing on retail banking digital transformation, and with strategy consultancy LEK. Yohan has an MBA from the Kellogg School of Management, Northwestern University, USA and understands Mandarin.
Xiao Li will provide strategic oversight and organisational support to Yohan and the International team in respect of a2MC’s China market development to ensure that the Company realises the full potential of the a2™ brand overall, particularly through its China label and English label IMF business in a complementary manner.

Yohan will join the Company this Thursday, 15 July 2021.

Executive General Manager – ANZ

Kevin Bush will join the Company’s Executive Leadership Team in the new role of Executive General Manager – ANZ, reporting to the Managing Director and CEO. In this new role, Kevin will be responsible for leading the Company’s business in ANZ with a focus on continuing to grow the liquid milk business in the near term as well as evolving its strategy to realise the full potential of the a2 Milk™ brand.

Kevin has held the role of Sales Director – ANZ at a2MC for the past 5 years. In that time, he has been pivotal in growing the a2 Milk™ liquid milk brand and driving increased market share. Kevin has also overseen the successful establishment of the a2 Platinum® brand in the South Korean market and various other business development initiatives across the group.

Kevin is a highly experienced sales and marketing professional with extensive FMCG experience across both the Australian and UK markets and has held senior positions with leading consumer goods companies including Mars, Nestle and McCain Foods.
Kevin and Yohan will work in close collaboration in relation to retail key account management of the IMF and liquid milk businesses in ANZ.
Kevin will commence his new role effective from today, 12 July 2021.

Collectively these leadership appointments and any related organisational changes are not expected to have a significant impact on the employee costs of the Company.

The Company will, in due course, review its external segment reporting considering these leadership changes and the pending acquisition of Mataura Valley Milk.

Quotes for media

David Bortolussi, Managing Director and CEO of a2MC, said, “I am delighted to be able to elevate two of our high potential leaders, Xiao Li and Kevin Bush, to be direct reports to myself and for Kevin to join Xiao Li on our Executive Leadership Team demonstrating the depth of talent within the Company.”

“I am also pleased to be able to attract someone as talented as Yohan Senaratne to join our Company, who I am sure will challenge our thinking and execution and make a valuable contribution to our Executive Leadership Team over time.”

“Together these appointments and organisational changes will provide more dedicated leadership and focus on key components of our business and improve execution going forward”.

Authorised for release by the Board of Directors

David Bortolussi
Managing Director and Chief Executive Officer
The a2 Milk Company Limited

[carrom74]

One from Danone the other day and one today from Bellamy”s .. sounds to me -the new CEO is pretty aggressive. Especially most of the appointments are directly reporting to him. Bring it on!!

[kiora]

"Li is the managing director of Ctom​ Group Holding​ and has watched daigou sales of his skincare and health supplements by drop 80 per cent, but he says a new sales model is already evolving.

Kiwi daigous are becoming “brand ambassadors” who work with distributors, brands and manufacturers, and do live-stream product promos.

“Some have a million followers on TikTok​, some have over 100,000 followers ... I know quite a few that make $1000 a week.”"
https://www.stuff.co.nz/business/125664174/thousands-of-chinese-kiwi-traders-have-lost-much-of-their-1-billion-business-selling-products-to-china-due-to-covid19

[Lease]

From the latest appointments, we can see ATM is not sitting there and waiting for die. They are fighter!

Given the fact their brand is still hugely popular in China, it will be a matter of time to recover.

[Wai Wai]

More rearrangement of the deck chairs at ATM today
Why don't they "merge" with Bubs Australia
An easy scrip exchange could give them access to the US market (Supplier to ATM, Synlait have given up via shareholder Munchkin)
Bub mkt cap $300m v ATM $5650m
Just saying

[Balance]

https://www.shortman.com.au/stock?q=A2M

Shorts building up momentum again so there are those who obviously see an opportunity to make money (again?) from the recovering sp.

[JohnnyTheHorse]

https://www.shortman.com.au/stock?q=A2M

Shorts building up momentum again so there are those who obviously see an opportunity to make money (again?) from the recovering sp.

Really interesting to watch this play out (and amazing trading in the meantime!). That data is 4 days delayed so will be interesting to see if they're still increasing after breaking some technical levels the last few days.

If the company is concerned about share price they just need a trader to time positive spin announcements for them. Right around key short stop levels to create pops in the price, creating endless short covering momentum. Elon Musk has been a master of this.

[Maxtrade]

Really interesting to watch this play out (and amazing trading in the meantime!). That data is 4 days delayed so will be interesting to see if they're still increasing after breaking some technical levels the last few days.

If the company is concerned about share price they just need a trader to time positive spin announcements for them. Right around key short stop levels to create pops in the price, creating endless short covering momentum. Elon Musk has been a master of this.

SP seems to be struggling to maintain above 7.6NZD (7.15AUD).

Thoughts on if you still think will drop back down to form a lower trough around the previous lows. Or if see it staying above 7.5NZD now and pushing through to break 8NZD ?

[JohnnyTheHorse]

SP seems to be struggling to maintain above 7.6NZD (7.15AUD).

Thoughts on if you still think will drop back down to form a lower trough around the previous lows. Or if see it staying above 7.5NZD now and pushing through to break 8NZD ?

We have retraced ~70% from the previous weekly high (wc 12/4) and low (wc 17/5) so odds strongly favour a weekly higher low being set (i.e. not falling below previous lows). Ideal scenario for the bulls is a retracement up to a maximum of AU$6.50 and then continuation, forming a weekly bull flag. I am still looking for the weekly lower high to be set, with the strong resistance rejection on Monday and daily overbought RSI indicating to watch for this. The bear volume hasn't be convincing though.

Disc: have been day trading with bullish bias last few days, however short again on NZX as of this morning, will short further on ASX if it gaps up on open (tight stops as am trading counter trend and further upside is real possibility).

[aperitif]

a2 continuing momentum from 618 sales, surpassing Aptamil. Serves as a proxy for penetration into Tier 3 & 4 cities as JD’s supply chain is more superior than other platforms.

12745

[Maxtrade]

well done
Seems to be a pattern emerging at the moment NZ bullish OZ bearish..before mid-day seems good for a shorting play.
Probably should but I don't play the shorting game.. It seems many are, maybe the reason for these mid-day slumpings.

Dont you think it's a little bit dangerous playing the game with ATM...as it is in a short/medium term rally mode.

SP breaking down through 7.5 NZD.

Guess its time to see if there gets a bullish push up off 7.5 being a resistance level. Or if it will break through indicating a fall back down through the gap zone and lower SP...

Any thoughts team?

[JohnnyTheHorse]

We have retraced ~70% from the previous weekly high (wc 12/4) and low (wc 17/5) so odds strongly favour a weekly higher low being set (i.e. not falling below previous lows). Ideal scenario for the bulls is a retracement up to a maximum of AU$6.50 and then continuation, forming a weekly bull flag. I am still looking for the weekly lower high to be set, with the strong resistance rejection on Monday and daily overbought RSI indicating to watch for this. The bear volume hasn't be convincing though.

Disc: have been day trading with bullish bias last few days, however short again on NZX as of this morning, will short further on ASX if it gaps up on open (tight stops as am trading counter trend and further upside is real possibility).

Had to be a bit more patient but there's the weakness I was looking for, with big spike in volume. Covered most of the position into AU$6.90 and now just looking for quick flips.

Bigger picture I am now looking for a daily higher low to be set and then a daily lower high, resulting in weekly consolidation.

[Maxtrade]

Had to be a bit more patient but there's the weakness I was looking for, with big spike in volume. Covered most of the position into AU$6.90 and now just looking for quick flips.

Bigger picture I am now looking for a daily higher low to be set and then a daily lower high, resulting in weekly consolidation.

So how low do you expect to see the SP retrace from here then? Back to AU$6?

Do you expect it to break above AU$7.0 before then retracing back further and harder?

[Hoop]

Big drop today when Ozzie opened..Continuing behaviour.. NZ bullish at opening Ozzie bearish at opening..Even with the previous rising share price it must be a great set up for the shorters as this behaviour has been happening for a while now.
The last few days has seen a lower than average volume
Anyway the rising trend is interrupted (breather?) at the EMA100 resistance, which isn't a surprise as we must remember the recovering?? ATM (A2M) is still in Bear status (price below the MA200). If ATM is trying to shake off its Bear Status then it is important that the EMA50 support area holds (~NZ$7.00) (~A$6.50)..Interestingly it is also the second support which a rule of thumb disciplined few will have their stops set just below that price.

As I type NZ$7.36 -21c -2.8% with no medium term (default settings) technical damage...only very short term damage.

Disc:Still holding

[JohnnyTheHorse]

So how low do you expect to see the SP retrace from here then? Back to AU$6?

Do you expect it to break above AU$7.0 before then retracing back further and harder?

Closed on the lows with the largest volume since the gap down so that's a short term red flag.

My ideal scenario I'm looking for is a flush down on the ASX within the first 15 mins tomorrow, hourly RSI oversold to coincide with support around AU$6.60, marking a daily higher low. Then sell and go short looking for a daily lower high leading to weekly consolidation (maybe around AU$7ish - but monitor price action and volume).

Impossible to predict where a weekly higher low will be set, however we do know it is the most likely scenario given the size of retracement (once we officially set the weekly top). As we know to be looking for it, it's a case of monitoring price action closely and waiting for the setup. There are strategies to try and hit the weekly bottom for advanced traders, however most people are best to simply wait for a weekly candle to close above the previous week.

As Hoop says, medium term (trading weekly trends) what we saw today has caused no issues and is expected price action. I would say though that when we get weekly consolidation the weekly higher low (most likely scenario) can be set anywhere between the previous low and around the current price. This is a massive range and is why I do not view buys around current prices as sensible trades unless you are managing risk through other strategies.

[Maxtrade]

Big drop today when Ozzie opened..Continuing behaviour.. NZ bullish at opening Ozzie bearish at opening..Even with the previous rising share price it must be a great set up for the shorters as this behaviour has been happening for a while now.
The last few days has seen a lower than average volume
Anyway the rising trend is interrupted (breather?) at the EMA100 resistance, which isn't a surprise as we must remember the recovering?? ATM (A2M) is still in Bear status (price below the MA200). If ATM is trying to shake off its Bear Status then it is important that the EMA50 support area holds (~NZ$7.00) (~A$6.50)..Interestingly it is also the second support which a rule of thumb disciplined few will have their stops set just below that price.

As I type NZ$7.36 -21c -2.8% with no medium term (default settings) technical damage...only very short term damage.

Disc:Still holding

Thanks Hoop for that makes sense. Maybe will touch on the 10 or 12EMA then bounce up and rally on again from there. Interesting to see and learn.

[aperitif]

https://www.oracle.com/news/connect/a2-milk-standardizes-on-oracle-cloud.html

[Leftfield]

https://www.oracle.com/news/connect/a2-milk-standardizes-on-oracle-cloud.html

Thanks for posting aperitif...... great to see lessons being learned and progress being made.

More progress made as per this article. (https://jingdaily.com/jd-618-promotion-china-business/) A2 4th top selling brand....

"JD’s 618 Grand Promotion was a roaring success, with a reported total transaction volume (https://jdcorporateblog.com/jd-reports-rmb-343-8-billion-yuan-transaction-volume-for-618-grand-promotion/) of over $53 billion (343.8 billion RMB) over the 18-day shopping extravaganza. The company exceeded its 2020’s transaction value of $41.5 billion (269.2 billion RMB)........JD highlights that over 20,000 international brands from more than 100 countries took part in the 2021 shopping marathon, and sales of close to 700 brands more than doubled. The best performing brands were Aptamil, Estée Lauder, A2, Nintendo, and the Korean holistic beauty brand, Sulwhasoo...."

[Leftfield]

deleted duplicate

[hesiod]

I was subject to one of those migrations to Oracle a few years ago. Nightmare, had an overdue invoice for 3 months.

[imarktu]

That's one way to burn the cash

[Gerald]

From Coopers:

We had an engaging first meeting with the new CEO of a2 Milk, Mr David Bortolussi. We were impressed by his humility and openness in discussing the current challenges the business is facing. He also possesses a deep level of understanding of the business and the infant formula industry.

We are encouraged by his greater focus on building a bigger presence on the ground in China, from investing in the local sales team to increasing support for distributors and stores. The Company is also actively upgrading its IT and system, implementing a new ERP system to better manage inventory. Whilst the financial impact of these investments will take time to see, we believe these are the right steps and are encouraged by the early progress.

[Leftfield]

Watermark Funds Management has advised their clients that they like ATM's prospects.

Here's part of their reasoning;

12759

As always. DYOR and make your own decisions.

(Crikey, dare we believe this site is on the mend!!?? ...... thanks admin and Vince for all your work.)

[Hoop]

Article about A2M ATM behind a paywall on the NZ Herald site but you can read all of it here (https://sciencebags.com/business/can-a2-milk-recapture-the-great-growth-rates-of-the-past/)Basically a summary of what has happened with some opinions on what the future might hold. An interesting read.

Disc: holding

[Balance]

Article about A2M ATM behind a paywall on the NZ Herald site but you can read all of it here (https://sciencebags.com/business/can-a2-milk-recapture-the-great-growth-rates-of-the-past/)Basically a summary of what has happened with some opinions on what the future might hold. An interesting read.

Disc: holding

Excellent summary indeed.

This paragraph encapsulates why ATM is being watched closely :

“But there are huge differences of opinion among analysts about what 2022 will bring. Of 12 analysts who cover the stock, there is a 72 per cent difference between the highest and lowest EBITDA estimate.”

Seasoned investors know that a huge divergence of opinions and forecasts of a stock means that serious money is going to be made or lost!

[winner69]

Hard to believe share price is in the 7’s

[Ggcc]

Article about A2M ATM behind a paywall on the NZ Herald site but you can read all of it here (https://sciencebags.com/business/can-a2-milk-recapture-the-great-growth-rates-of-the-past/)Basically a summary of what has happened with some opinions on what the future might hold. An interesting read.

Disc: holding
I keep winning a phone with this link Lol. I just can’t read the article

[777]

I keep winning a phone with this link Lol. I just can’t read the article

Works for me. Try a different browser.

[Balance]

Hard to believe share price is in the 7’s

Providing the opportunity to short for the negative view holders.

[sb9]

Article about A2M ATM behind a paywall on the NZ Herald site but you can read all of it here (https://sciencebags.com/business/can-a2-milk-recapture-the-great-growth-rates-of-the-past/)Basically a summary of what has happened with some opinions on what the future might hold. An interesting read.

Disc: holding

Nice one Hoop, very well articulated summary. I'm sure DB would lay a clearer long term pathway than that of his predecessors.

[sb9]

Providing the opportunity to short for the negative view holders.

Or perhaps, bigger gain for glass half full believers. Pick your side...

[mike2020]

Hard to believe share price is in the 7’s

It does seem overvalued. I didn't see any positives in that article, no growth, more expenditure, competition and lower margins and less Chinese babies. Was there not a resounding boo hiss when it was suggested more be spent on marketing? And how much of that cash everyone dreamed of seeing in a divi is still to be had? Do the math people.

[JohnnyTheHorse]

Battle between the bulls and the bears playing out the last few days. Things tightening up with a nice equilibrium forming on the 4h chart. We will either get a bull break of AU$7.07 and we are looking for potentially just a daily lower high, otherwise continuation of weekly uptrend. Or we get a bear break of AU6.77 on higher volume confirming the start of weekly consolidation and we start looking for that weekly higher low.

[mike2020]

You may as well be trading bitcoin.

[Arbroath]

You may as well be trading bitcoin.

I hope you don't give investment advice. A2 not without risk but has no debt and c. $500m of cash after the MVM purchase.
Imagine if the sky doesn't fall in like so many on this thread seem to want, and also imagine where the world will likely be in 18-24 months when the populations are mainly vaccinated (at least those that want to be).

[Hoop]

Hard to believe share price is in the 7’s

Yeah..Its mind-blowing looking at this debt free company and noticing in hindsight how much expected future growth was factored into it's share price..

Hmmm.The question to be asked is..."is there still some residual growth factoring to be shaken out of the current price?"

Speaking about PE and Forward PE and how the future expected rate of growth effects PE...the other thing (not mentioned) is the inflation effect..Inflation is the primary driver in Share market Theory..So, in theory this could be another headwind for ATM (A2M) as for most equities... Inflation inversely correlates with the PE Ratio.. Higher inflation lowers the PE value .. as well as expected inflation lowers Forward PE..
So could we see ATM's price become under more pressure if rising inflation becomes persistent?...Will ATM rising rate of growth return?..If so will the share price be muted if inflation rises as well ?

Happily there is no Market evidence of an expected no growth or negative rate of growth + inflation scenario

Thoughts??

[Leftfield]

Thanks Hoop, good article.

The article's continued focus on China undersells the importance of A2's progress in the USA and other parts of Asia IMHO.

I like Oliver's conclusion; But will it get to $20 next week? Probably not. Will it be there in a couple of years’ time? Who knows,” Mander says. “But they will wind up with a much more sustainable business, ultimately.”

[winner69]

....deleted .... all a bit complicated

[aperitif]

Check out the Alibaba Fresh Hippo network in Shanghai now. Channel Shift….guess who’s topping the list….

1276612767

[JohnnyTheHorse]

Battle between the bulls and the bears playing out the last few days. Things tightening up with a nice equilibrium forming on the 4h chart. We will either get a bull break of AU$7.07 and we are looking for potentially just a daily lower high, otherwise continuation of weekly uptrend. Or we get a bear break of AU6.77 on higher volume confirming the start of weekly consolidation and we start looking for that weekly higher low.

There we are testing that lower bound (and technically breaking the equilibrium bearish by dropping through AU$6.80). The much larger volume in the first 5min today is a warning sign we may see a break.

[Sideshow Bob]

Appointment of Chief People & Culture Officer - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/376156)

The a2 Milk Company (“the Company”, “a2MC”) is pleased to announce the appointment of Amanda Hart as Chief People & Culture Officer.
Amanda will join a2MC from her most recent role as Head of Human Resources, Australia and New Zealand, with Dyson Appliances, having spent the past four years with the organisation as a senior human resources leader across several Asia Pacific markets with a focus on leadership development and organisational change.
Prior to her time at Dyson Appliances, Amanda held senior human resources roles with Cotton On Clothing and Global Radio.
In the Chief People & Culture Officer role with a2MC, Amanda will be responsible for driving the people strategy and executing integrated programmes focused on continuing to improve a2MC’s capability building, leadership development, employee engagement, diversity and inclusion, and pioneering culture.
David Bortolussi, Managing Director and Chief Executive Officer of a2MC, said, “Amanda is a highly capable people and culture leader with extensive consumer industry experience with innovative brands. The skills and impact Amanda has demonstrated, and her alignment with our culture at a2MC make her an excellent candidate for the role. Amanda is passionate about leadership development and employee experience, and I look forward to her joining the Company.”
Amanda will commence in her role on 6 September 2021 reporting to the Managing Director and CEO.
Authorised for release by the Board of Directors

[winner69]

Things were going well a week or so as share price headed to 8 bucks

Now 13% off recent high of 788

Suppose that means that the down trend from 20 bucks is still in place

[Beagle]

Thanks for sharing Baa Baa. Good article and food for thought. https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/financials/
Average broker forecast for FY22 is 25 cps on sales recovering to $1,387m and EBITDA margin of 20%.
At $7.68 that puts them on a FY22 forward PE of 31...more or less the same when Geoff Babbidge was running it many years ago and it was growing really strongly.

My thoughts are that Covid variants will dog us for many many years and the CCP will get increasingly forthright in pushing buy Chinese made. Are these risks factored into the current share price with that forward PE ?

I think there's a lot of people jumping on board this as a momentum trade. With no forecast dividend from an investment point of view taking into account the risks I am dubious that the above analysts average forecast supports a share price materially higher than the current one. If I'm wrong I'm okay with that and good luck to shareholders.

8 July 2021. Just over two weeks ago and the share price is down nearly $1 since then. I think a lot of that momentum money is running for the hills.
Happy to continue to watch this circus from the sidelines as based on forward metrics and known challenges, whilst these look cheap at less than one third of the $21.74 price peak this time last year, they're not cheap based on average expectations of FY22 earnings.

Correct Winner, there was no break up through the 100 day moving average and the downtrend is still intact.

[Lease]

8 July 2021. Just over two weeks ago and the share price is down nearly $1 since then. I think a lot of that momentum money is running for the hills.
Happy to continue to watch this circus from the sidelines as based on forward metrics and known challenges, whilst these look cheap at less than one third of the $21.74 price peak this time last year, they're not cheap based on average expectations of FY22 earnings.

Correct Winner, there was no break up through the 100 day moving average and the downtrend is still intact.

All sorts of info I have received indicate ATM situation has been improved. Even today's KFL quarterly newsletter has confirmed "Product pricing on key online platforms recovered from recent lows, and its sales rankings on major e-commerce platforms, Tmall and JD.com areat similar levels to last year."

Surely if you want absolute certainty on ATM's business recovery, you can wait until its SP well above $10.

[silu]

All sorts of info I have received indicate ATM situation has been improved. Even today's KFL quarterly newsletter has confirmed "Product pricing on key online platforms recovered from recent lows, and its sales rankings on major e-commerce platforms, Tmall and JD.com areat similar levels to last year."

Surely if you want absolute certainty on ATM's business recovery, you can wait until its SP well above $10.

Do we actually now know what David's plans are? So far it's still crickets and lots of conjecture.

[Lease]

Do we actually now know what David's plans are? So far it's still crickets and lots of conjecture.

Surely I don't know. But one thing is certain: he wants ATM business to be better performed. And there are recovery signs out there.

[Beagle]

All sorts of info I have received indicate ATM situation has been improved. Even today's KFL quarterly newsletter has confirmed "Product pricing on key online platforms recovered from recent lows, and its sales rankings on major e-commerce platforms, Tmall and JD.com areat similar levels to last year."

Surely if you want absolute certainty on ATM's business recovery, you can wait until its SP well above $10.

100 day moving average is currently ~ $7.60. It came close to breaking up through that which would have been a bullish TA sign but it has now backed off a fair bit which is bearish.

Recovering from lows doesn't mean much. Brokers are already baking in a much improved GP margin in FY22 forecasts that had ATM on the metrics I noted previously, which are expensive.

My prognosis is quite simple. The forward metrics this company is trading on are expensive for the risks and unknowns involved and from a TA perspective the downtrend remains intact. We'll know a lot more when they report next month but we know that anything this company forecasts needs to be treated with a grain of salt because to be quite frank about it, their reputation in terms of their ability to forecast anything has been very seriously damaged.

[winner69]

All sorts of info I have received indicate ATM situation has been improved. Even today's KFL quarterly newsletter has confirmed "Product pricing on key online platforms recovered from recent lows, and its sales rankings on major e-commerce platforms, Tmall and JD.com areat similar levels to last year."

Surely if you want absolute certainty on ATM's business recovery, you can wait until its SP well above $10.

Suppose KFL are waiting for a $10 plus share price before buying more …they also said ‘ We have been expecting to see this recovery for some time, but we want to see signs that the recovery will be sustained.

When you’ve got $23m or so invested in A2 already and lost heaps over last year they need to show some caution

[Beagle]

Suppose KFL are waiting for a $10 plus share price before buying more …they also said ‘ We have been expecting to see this recovery for some time, but we want to see signs that the recovery will be sustained.

When you’ve got $23m or so invested in A2 already and lost heaps over last year they need to show some caution

I think they're very busy trying to save face in regard to why they continued to hold ATM all the way through a series of profoundly shocking downgrades.
If they were objective about it they'd be at the very least, raising questions about management's credibility and the lack of timeliness of corrective actions.
I for one have lost a fair bit of confidence in the manager Sam Dickie's stock picking ability over this and remain very comfortable indeed to back my own ability to stock pick compared to theirs in the N.Z. market.
What they said
a2 Milk has rallied almost 40% from its intra-quarter lows
a2 Milk has experienced a volatile share price over the quarter, as
challenges with distribution and pricing influenced share price valuations.
Product pricing on key online platforms recovered from recent lows, and
its sales rankings on major e-commerce platforms, Tmall and JD.com are
at similar levels to last year.
We have been expecting to see this recovery for some time, but we want
to see signs that the recovery will be sustained. These positives followed
another disappointing earnings downgrade during the quarter and the
unexpected departure of Peter Nathan, leader of the Asia-Pacific business.

What they didn't say. We have held this company all the way through the year despite serious questions about management and their ability to forecast anything and ATM is now trading at just a fraction over 30% of what it was trading at a year ago. We stuffed up and should have been more proactive about reducing our stake much lower and much quicker.
No ownership of what a huge mistake it has been owning this company in the last year.

Instead they highlight it was up ~ 40% from intra quarter lows. Gosh, talk about creative marketing... (AKA putting lipstick on a PIG).

[Leftfield]

Crikey........Winners latest export stats as shown on the FPH thread (https://www.stats.govt.nz/information-releases/overseas-merchandise-trade-june-2021) also show diary and IF up 30% (up 40% to China)

Must be an error.

[bottomfeeder]

I think they're very busy trying to save face in regard to why they continued to hold ATM all the way through a series of profoundly shocking downgrades.
If they were objective about it they'd be at the very least, raising questions about management's credibility and the lack of timeliness of corrective actions.
I for one have lost a fair bit of confidence in the manager Sam Dickie's stock picking ability over this and remain very comfortable indeed to back my own ability to stock pick compared to theirs in the N.Z. market.
What they said

What they didn't say. We have held this company all the way through the year despite serious questions about management and their ability to forecast anything and ATM is now trading at just a fraction over 30% of what it was trading at a year ago. We stuffed up and should have been more proactive about reducing our stake much lower and much quicker.
No ownership of what a huge mistake it has been owning this company in the last year.

Instead they highlight it was up ~ 40% from intra quarter lows. Gosh, talk about creative marketing... (AKA putting lipstick on a PIG).

Thats why the SP is down, because lots were proactive about reducing their stake. ie increased sellers reduces the SP.

[Balance]

https://www.stuff.co.nz/business/125863163/sharemarket-falls-as-pessimism-creeps-into-a2-milk-tourism-stocks-decline

Regulatory risk? Really?

Looks like just the usual ebb & flow of traders taking their profits or cutting losses after loss of share price momentum.

August announcements not that far off now.

[winner69]

Kingfish at June 30th had about 500k less shares than at March but about 500k more than a year ago

They probably regretting their averaging down activity in March quarter

Whatever they sill have $20m invested in A2 - but way off the $60m they had a year ago

Indicative numbers

[Ferg]

Regulatory risk? Really?

Looks like just the usual ebb & flow of traders taking their profits or cutting losses after loss of share price momentum.

That's right......I find it funny when journalists try to link events in the world with events on the share market. IMO that is only relevant with major unexpected movements (like an earnings downgrade or a takeover), not the daily ebbs and flows. Slow news day at Stuff...?

[alokdhir]

Looks like this is a buying opportunity to go into results which must be better then market expecting !!!

[Beagle]

https://www.goodreturns.co.nz/article/976519009/a2-shares-plunge-as-chinese-regulator-flexes-its-muscles.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+26+Jul+ 2021

Jarden have a price target of $6.10 one year hence so with no dividends that suggests fair value is about $5.50 now.

I think many are underestimating the geopolitical risk with this one. I have always been cautious with this, (held a moderate stake when I used to own), because of the fact that there is simply too much reliance on one product into one market in China.

[flyinglizard]

Daigou corporate channel has gone. reseller market collapsed.

[Balance]

https://www.bloomberg.com/news/articles/2021-07-21/china-s-daigou-shoppers-who-buy-goods-overseas-get-grounded-by-pandemic

The pandemic has changed the daigou market - irreversibly.

[carrom74]

https://www.bloomberg.com/news/articles/2021-07-21/china-s-daigou-shoppers-who-buy-goods-overseas-get-grounded-by-pandemic

The pandemic has changed the daigou market - irreversibly.
Wow.. what a somber read.. DB has to bring his potent best with all he has to the table to turn the fortunes. And for the investors it will be a long drawn wait to see any realistic turnaround.Aug 26th will be an interesting day. Thanks B for the link

[JimmyTrade]

Crikey........Winners latest export stats as shown on the FPH thread (https://www.stats.govt.nz/information-releases/overseas-merchandise-trade-june-2021) also show diary and IF up 30% (up 40% to China)

Must be an error.

Commodity dairy was up 30% and IF was down 23%.

This is inline with what I am seeing local dairy factories production schedules. Not much IF but plenty of cheese, cream, WMP and SMP.

[Leftfield]

Commodity dairy was up 30% and IF was down 23%.
This is inline with what I am seeing local dairy factories production schedules. Not much IF but plenty of cheese, cream, WMP and SMP.

Thanks JT, can you provide a source for your info?

FWIW last firm data I saw was IF exports ex Lyttleton to May 21 up 30% as below;

12781

[Beagle]

Kingfish at June 30th had about 500k less shares than at March but about 500k more than a year ago

They probably regretting their averaging down activity in March quarter

Whatever they sill have $20m invested in A2 - but way off the $60m they had a year ago

Indicative numbers

Kingfish really have fiddled with bits of paper rather than taking decisive action. I'm not impressed !

[Balance]

Kingfish really have fiddled with bits of paper rather than taking decisive action. I'm not impressed !

$20m now but would have been $65m before?

Caught up like a possum in the multiple downgrade headlights, it seems.

[SPC]

Agree totally. Been in KFL since day one.
They have a history of falling totally in love with a 'high conviction' holding and the become reluctant to divorce when things turn sour. I've seen this again and again and it's the holders who suffer while the management team get rewarded for the historical upside bonus.
The team need to harden up. Hope they're reading....

[Beagle]

$20m now but would have been $65m before?

Caught up like a possum in the multiple downgrade headlights, it seems.

That sums it up very well.

[Leftfield]

$20m now but would have been $65m before?
Caught up like a possum in the multiple downgrade headlights, it seems.

Interesting. I seem to recall some investors on here saying their holding of ATM via their Kingfisher funds was a 'safe proxy holding'.

Meanwhile some little minnow non Kingfisher shareholders have been able to reduce their holdings, realise profits and 'freehold' or de-risk their remaining ATM holdings. The learning for me - best to control your own destiny.

Anyways, that aside today a RNZ commentator was saying the recent sell-off of ATM was a result of changes in Chinese regulations which are having the result of returning Chinese capital 'home'. This article sums up his comments. (https://www.reuters.com/business/law-without-order-investors-grapple-with-chinas-regulatory-risk-2021-07-26/)

[Beagle]

Can't recall that I ever used the term safe proxy holding ?, perhaps I did, I can't recall but I do recall saying while holding KFL last year that I am glad they reduced their stake in ATM...but it would seem they didn't actually reduce their holding at all...just messed about with it a bit from one quarter to another, deliberately so to give the very creative impression they were actually doing something about the unfolding fiasco and resulting share price meltdown ?

Agree though that its a truism that nobody cares about your money and investments as much as you do so I am happy to row my own boat with N.Z. investments and more than happy to back myself to beat Kingfish's performance. Still have some Barramundi warrants though and the Barramundi investment team seem to be doing a pretty good job.

Anyway...back to ATM. The herald, (end of market day summary), article yesterday suggested that ATM might struggle to renew their license in China next year ? Is it common knowledge that there is the need to renew that license ? What's to stop the Chinese authorities simply refusing to renew it for whatever reasons they like or even no reason at all ? Its not like they are playing very nicely on a multitude of other trade, technology and intellectual property fronts is it ! Geopolitical risk even higher than most people are currently aware ?


Daigou corporate channel has gone. reseller market collapsed. Agreed. The key to understanding this is people need to earn a living and if they can't do that with Daigou they need to find another way. Most will have worked out by now that international travel is not going to revert to anything like the way it was any year soon. Another key for me with this one is mothers need to be able to access infant milk powder for their baby. This is not optional unless they can breast feed and many will have found an alternative brand at a lower price that they now trust and are highly likely to stick with the trust in the new brand they have found.

[Leftfield]

Agree though that its a truism that nobody cares about your money and investments as much as you do so I am happy to row my own boat with N.Z. investments and more than happy to back myself to beat Kingfish's performance.


Not getting at you Beagle, I just recall a general comment and agree with you on above point. I made a similar decision in 2013 and have never looked back.

As to increased Chinese risk, it's all about diversification and ATM is my only holding primarily at direct risk of this, tho' should things really turn to custard with China, the effects will be felt on most NZ and Aus stocks (and certain NZ/Aus retailers would also not be immune.)

With ATM the threat is somewhat mitigated by its links to Chinese state operators via its Chinese distribution partnership and now its linked shareholding in Mataura Valley Milk.

Maybe we should play it extra safe and put all our faith in OCA!

[Hoop]

Big drop today when Ozzie opened..Continuing behaviour.. NZ bullish at opening Ozzie bearish at opening..Even with the previous rising share price it must be a great set up for the shorters as this behaviour has been happening for a while now.
The last few days has seen a lower than average volume
Anyway the rising trend is interrupted (breather?) at the EMA100 resistance, which isn't a surprise as we must remember the recovering?? ATM (A2M) is still in Bear status (price below the MA200). If ATM is trying to shake off its Bear Status then it is important that the EMA50 support area holds (~NZ$7.00) (~A$6.50)..Interestingly it is also the second support which a rule of thumb disciplined few will have their stops set just below that price.

As I type NZ$7.36 -21c -2.8% with no medium term (default settings) technical damage...only very short term damage.

Disc:Still holding

TA Chart update:Yesterdays drop created medium term TA damage and fired (chart default-medium term indicators) sell signals..This adds weight to the suggestion the recent 2 month long rally may not be the start of a market cycle reversal (Bear to Bull) but a bear cycle continuation after the correction (rally)...As predicted the stops got actioned when the EMA50 + failurer of the second support which caused yesterdays sudden price fall as sellers dominated.

The year long ATM Bear Cycle has produced very few corrections (rallies) and those corrections which happened lasted only about a week.. This recent rally is 2 months old and is a conspicuous change in behaviour which suggests the bear has died and this current rally is the bull calf's behaviour or the mature Bear has changed its temperment. In Technical jargon it could be argued this change in behaviour may in fact be a cyclic reversal..However yesterdays sell signal signs put a damper on things as it doesn't look good for the reversal argument mentalists.

The Bull optimists are now clinging on diminishing bullish threads after yesterdays break. They can still say that it's early days. Small hope that yesterday set a Bear Trap and there has to be a lower low (<$6.40ish) confirmation for the Bear Cycle continuation.

They say buy near support not near resistance..The charted $6.4 - 6.5 support area is not well defined if it exists at all..the undefined support/resistance shows buyer hesitant behaviour (uncertainty) around this price area.

Disc: Holding (just hanging in) My second support stop is in this not well defined area.

12784

[Hoop]

Grrrr..Couldn't expand the chart..Trying again. Still small:mad ;:

[Beagle]

Not getting at you Beagle, I just recall a general comment and agree with you on above point. I made a similar decision in 2013 and have never looked back.

As to increased Chinese risk, it's all about diversification and ATM is my only holding primarily at direct risk of this, tho' should things really turn to custard with China, the effects will be felt on most NZ and Aus stocks (and certain NZ/Aus retailers would also not be immune.)

With ATM the threat is somewhat mitigated by its links to Chinese state operators via its Chinese distribution partnership and now its linked shareholding in Mataura Valley Milk.

Maybe we should play it extra safe and put all our faith in OCA!

LOL, I know Maverick would be proud of you ;)

[Old mate]

https://www.goodreturns.co.nz/article/976519017/a2-milk-drops-another-4-on-regulation-risk.html

[Balance]

https://www.goodreturns.co.nz/article/976519017/a2-milk-drops-another-4-on-regulation-risk.html

If China moves against ATM, sp will be $2.00.

Goodbye, sayanora, 再见

[Old mate]

Interesting stuff allright.

[Ggcc]

https://www.goodreturns.co.nz/article/976519017/a2-milk-drops-another-4-on-regulation-risk.html
This could be a way to takeover a company. Scaremongering the share price down and then pounce in for a takeover. I do doubt China will kick ATM out. It is a possibility, but a tiny one.

[flyinglizard]

The corporate daigou has gone, repeat again.

Big one cannot get much sale as before, then lower down the average price by 15% to attract more sales. Smaller corporate daigous have to follow the price war. They can afford this if the selling price is a bit below the purchase price, because they have GST return, a reward as exporters. When the cash flow dries up or the sales cannot be maintained, it will become a bigger problem. They cannot stock large amount of IF as before, due to limited cash flow. The rent, salary cost, overhead still the same.

They sell a fixed price for 6 tins IF to customers and receive cash in front. However, the ship cost suddenly increases from 400 in May 2020 to 3200 in July 2021, pls refer to Baltic Exchange Dry Index listed below.
https://tradingeconomics.com/commodity/baltic

The shipping normally need 3-7 weeks from NZ to China, for some corporate daigous, 3 months now. Not caused by shipping company, but corporate daigou just cannot do the business, they delay the order process till the customers apply for a refund or wait the shipping cost down. They are happy to refund to avoid huge loss. The shipping cost keeps increase (3 times higher than 10 years average ) and I am just wondering how long they can survive. I know that a big one is using their own GST return cash flow to subsidize the sky high shipping cost and move the whole marketing team to China to save cost. There are massive of complaints from customers against corporate daigou since June this year.

A2 company has no idea about this, they do not understand their sales market and how corporate daigou strategies change under different trading environment. Daigous have done massive free marketing for ATM in the past. Now............even ATM sells through T-mall, taobao, JD.com without Daigou anymore, shipping cost still a killer.

[flyinglizard]

This could be a way to takeover a company. Scaremongering the share price down and then pounce in for a takeover. I do doubt China will kick ATM out. It is a possibility, but a tiny one.

I doubt the takeover theory. Geopolitics...... smart money intends to buy a company over 80% sales to China nowadays? Even Chinese money started back home since a year ago. Where is the buyer?

[carrom74]

A2 milk sp slid about 43% in 6 months and in the same period Feihe lost about 42%. Looks like it’s more than just china shutting down. Even in a “Protectionisitic”scenario, A2 would be struggling with lower child rates etc (just like feihe). Bottom line is to look beyond China and be innovative in the product offering and expand to new markets.

[bull....]

ill start with the technicals explanation to cover the a2 rally , you must remember it is still in a long term down trend.

a2 gapped down on the 10th may 21 to a new low and also became oversold during the following week. over the course of the last 2 mths it has rallied to fill that gap and became over brought around the 9th july.

on the risk front there are new risks just emerging this last week not the ones we already know about but the the recent action in china in regards to the education sector can be seen as a first step in the regulation to make having and raising children in china more affordable.
making infant formula a not for profit similar to education reform must be high on the agenda going forward to meet the goal of encouraging more births.

like carrom mentioned feihe is well down last few mths , not due to sales but could be up coming regulation of the sector.

[alokdhir]

China is showing its socialist colours ....which is more like old days and what CCP should have been doing all this while ...Look after the masses not let Rich become more rich and exploit the poor ...Doctrine of communism .

If it works well for the popularity ( I am sure it will be ...as there are always much more have-nots in any society so ....) then it can be long term declining story of China stock market and private companies ...." Not for Profit " This doctrine kills enterprises !!!

How it will effect ATM is not very clear but its over dependence on China will make it vulnerable

[Hoop]

Hmmm... Another round of the Dragon breathing unwelcome warm air over parts of the World..USA (self appointed world police) and it's Allies (including NZ this time) respond by poking a stick at it and telling it to piss off..Dragon gets upset and breathes hotter air....The worry for investors is how hot is it going to get this time?

Imagine thinking social structure with two dominate "cranky"elephants (Super powers) in a room together with hundreds of minions..

Anyway back to ATM (a minion?)

A good article from Seeking Alpha titled China Wipeout (https://seekingalpha.com/market-news/wall-street-breakfast?mailingid=24565481&messageid=wall_street_breakfast&serial=24565481.1357374&userid=23903223&utm_campaign=WSB%207_27_21&utm_medium=email&utm_source=seeking_alpha&utm_term=wall_street_breakfast).
Investors don't like reading possible scenarios like this "..While Beijing has tolerated conventional regulations on certain sectors in the past, the government now looks ready to kill whole companies or entire industries. One doesn't have to look far to the recent pulling of Ant Group's (NYSE:BABA (https://seekingalpha.com/symbol/BABA?source=content_type%3Areact%7Csection%3Amain_ content%7Cbutton%3Abody_link)) IPO or the DiDi Global (NYSE:DIDI (https://seekingalpha.com/symbol/DIDI?source=content_type%3Areact%7Csection%3Amain_ content%7Cbutton%3Abody_link)) fiasco that shook the investing world earlier this month...."

[dreamcatcher]

Question is how regulation could effect the 100's of other overseas IF suppliers or the overall Chinese IF market.

But then regulation could include MANY OTHER products except iron-ore.

[Hoop]

Just kicked the Minion out of my portfolio..Took a 10% loss.

Disc: sold out

[Balance]

Just kicked the Minion out of my portfolio..Took a 10% loss.

Disc: sold out

Buy back at $4.50?

[Hoop]

Buy back at $4.50?
:D...most definitely !!!! but with one proviso..I want to know 100% that its not going to fall to $3.50.:)

It's back on my watchlist..If it bounces up and holds price-wise anywhere from current price or above $5.50ish I may get excited..Might also get excited if I see a falling cat from a tall building

[Maxtrade]

Just kicked the Minion out of my portfolio..Took a 10% loss.

Disc: sold out

Yeah I sold out a while ago as well. Gave up hoping to recover my losses with ATM when didn't break through NZD $8 / 100 day EMA

Johnny the Horse, haven't heard an update from you in a while. What you posted a while ago still seems to be right on track. Do you still feel it is current and will play out this way. Or has recent China updates modified your view on this?


12791

[Lease]

China is showing its socialist colours ....which is more like old days and what CCP should have been doing all this while ...Look after the masses not let Rich become more rich and exploit the poor ...Doctrine of communism .

If it works well for the popularity ( I am sure it will be ...as there are always much more have-nots in any society so ....) then it can be long term declining story of China stock market and private companies ...." Not for Profit " This doctrine kills enterprises !!!

How it will effect ATM is not very clear but its over dependence on China will make it vulnerable

Well said alokdhir. I still clearly remember those old days: no stock market, no private companies, people only had a few options on clothing, food and other groceries, etc.

I feel sad to see China is going back. Don't know how far it will go back but trend is quite clear.

Long-term, it's bad for any companies doing business in China as regulation risk is too high.

[X-men]

u guys got to remember too...China also needed dairy products and IF products..that also give ATM a benefit.

[Balance]

Well said alokdhir. I still clearly remember those old days: no stock market, no private companies, people only had a few options on clothing, food and other groceries, etc.

I feel sad to see China is going back. Don't know how far it will go back but trend is quite clear.

Long-term, it's bad for any companies doing business in China as regulation risk is too high.

China will never go back to the China of old - backward, bullied by Western powers and with wide disparate of wealth from which communism emerged.

Moves made by the government there are designed to :

1. Crash any attempt by anyone or anybody to challenge the supremacy of the CCP,

2. Even out the wide disparity of wealth and differences emerging from their economic bloom.

When IF is sold in NZ for $40 but is sold for $80 in China, something is fundamentally wrong and uneven. So yes, expect there will be regulations to even out that wide gulf and erase super profits.

[X-men]

what a nonsense....so..Milazo bike..from warehouse made in china..Retail price here $250...

In china, the same model of bike retail price around $50 ......

What do you think about that??

[X-men]

In conclusion that is because NZ can not make the bike as cheap and good quality like the Chinese made one. and CHina can not produce enough dairy and IF to feed their own people. That is why China is always going to depend on overseas dairy products

[alokdhir]

I also dont agree with some of Balance views ...Supremacy of CCP part I agree as thats the ethos of ruling party and the only political party there . They dont believe in multiple political views or aspirations

To maintain that tight grip over population of that size they need to be popular also ...like anti landlord movement brought many poor followers which lead to present day China

Now they need to renew their pro poor and anti capitalistic forces stance ....as a political move and strategy ....hastened by veiled challenge to their authority and decisions by speech of Mr Jack Ma .

They want to pursue or look to pursue pro poor and anti rich policies as thats the easiest way to be politically popular to maintain power and control .

Not for profit theme comes from that and anti big and rich companies also ...Shareholders are not CCP supporters ....poor workers and have nots are !!

ATM is caught in the mix ...their main fault , lack of diversified sources of profit ...they are trying but not successful so far

[davflaws]

something is fundamentally wrong and uneven. So yes, expect there will be regulations to even out that wide gulf and erase super profits.

Perhaps you could encourage Jacinda to take similar action.

[Balance]

what a nonsense....so..Milazo bike..from warehouse made in china..Retail price here $250...

In china, the same model of bike retail price around $50 ......

What do you think about that??

Therein lies the difference between a communist state vs a capitalist (to become communist) state like NZ.

[Balance]

Perhaps you could encourage Jacinda to take similar action.

She already is - throwing billions of dollars at everything and anything which screams votes, but without the foggiest idea of how to deliver desired outcomes.

[JohnnyTheHorse]

Yeah I sold out a while ago as well. Gave up hoping to recover my losses with ATM when didn't break through NZD $8 / 100 day EMA

Johnny the Horse, haven't heard an update from you in a while. What you posted a while ago still seems to be right on track. Do you still feel it is current and will play out this way. Or has recent China updates modified your view on this?


12791

Skiing this week so no charts or trading. I picked a bad week as I would have been killing it!

Not sure how much of this is China vs just a technical breakdown. First weekly candle to close lower than the previous in like 8 or 9 weeks? Market loves to get everyone very bullish and then quickly fill them with fear and make them sell.

The size of this drop is a big red flag. It now shifts odds, with continuation to new highs unlikely in the near term. Most likely scenario is for price to now tighten up in a range (called an equilibrium - higher lows, lower highs). Wait for the breakout for longer term direction.

I reiterate my previous comment that in my view it isn’t a successful strategy buying late into a weekly rally that hasn’t seen a weekly trend change. You either have your stop below the previous low (poor risk/reward) or at some arbitrary level to get a better risk/reward. The problem with the latter is that you know a weekly higher low is most likely and you’ll probably get stopped out right at it. If you want in on weekly rallies then you buy for the daily trend change and then let her run.

A wee tip… a good time to buy a weekly higher low is when daily RSI is oversold.

[Balance]

https://www.stuff.co.nz/business/125664174/thousands-of-chinese-kiwi-traders-have-lost-much-of-their-1-billion-business-selling-products-to-china-due-to-covid19

Looks like it’s bye bye Daigou as a low cost effective sales channel for the likes of ATM.

Note the reference to China domestic brands gaining favour due to nationalistic fervour - so ATM can certainly point to the US trade war with China as a factor to consider in its sales & promotion strategy.

[Balance]

https://www.farmonline.com.au/story/7360474/shaken-a2-milk-revamps-business-teams-concludes-nz-purchase/

Good summary of recent executive hires by DB & ATM.

Certainly a high powered team being assembled and ATM must be digging into its cash pile to headhunt them into the company.

Looking forward to the strategy reset - here’s hoping they come up with a good one which fully explores all options, weaknesses experienced and focus on exactly how ATM can revive its fortunes.

[Beagle]

The Dragon has gone completely feral...who knows what they might do next against whom, it appears quite clear NOTHING is off the table as far as the Chinese are concerned in terms of putting their own interests ahead of any other country regardless of cost https://www.news.com.au/technology/innovation/military/china-threatens-to-nuke-japan-if-country-intervenes-in-taiwan-conflict/news-story/d9af14dc6b90628082e79ab4c77629e1

Who knows what their next moves will be on the trade front but they are certainly whipping up a frenzy of nationalism with their own people.

[Balance]

The Dragon has gone completely feral...who knows what they might do next against whom, it appears quite clear NOTHING is off the table as far as the Chinese are concerned in terms of putting their own interests ahead of any other country regardless of cost https://www.news.com.au/technology/innovation/military/china-threatens-to-nuke-japan-if-country-intervenes-in-taiwan-conflict/news-story/d9af14dc6b90628082e79ab4c77629e1

Who knows what their next moves will be on the trade front but they are certainly whipping up a frenzy of nationalism with their own people.

The Chinese has not forgotten or forgiven Japan for the atrocities committed during the Japanese invasion & occupation of China between 1937 to 1945.

So give them half a chance and they will exact revenge.

https://allthatsinteresting.com/rape-of-nanking-massacre#9

[mike2020]

The Chinese has not forgotten or forgiven Japan for the atrocities committed during the Japanese invasion & occupation of China between 1937 to 1945.

So give them half a chance and they will exact revenge.

https://allthatsinteresting.com/rape-of-nanking-massacre#9
That was exactly my take after visiting China. If you visit the national museum next Tiananmen square check out the right side wall. It's a montage of Japanese atrocities.

[Beagle]

The Chinese has not forgotten or forgiven Japan for the atrocities committed during the Japanese invasion & occupation of China between 1937 to 1945.

So give them half a chance and they will exact revenge.

https://allthatsinteresting.com/rape-of-nanking-massacre#9

WOW...some profoundly confronting images there. No wonder resentment runs very deep.

[alokdhir]

The Chinese has not forgotten or forgiven Japan for the atrocities committed during the Japanese invasion & occupation of China between 1937 to 1945.

So give them half a chance and they will exact revenge.

https://allthatsinteresting.com/rape-of-nanking-massacre#9

Most number of tourists in Japan come from China ...Most money they spend too

Most Japanese stuff bought by Chinese

I visited Japan on a guided tour and was told by a very experienced Guide ...that most Japanese resent chinese tourists and their poor manners but out of politeness bear them ...also maybe for their money

Rich Chinese seems to have forgotten the past in embracing and enriching Japan !!!

[Maxtrade]

Skiing this week so no charts or trading. I picked a bad week as I would have been killing it!

Not sure how much of this is China vs just a technical breakdown. First weekly candle to close lower than the previous in like 8 or 9 weeks? Market loves to get everyone very bullish and then quickly fill them with fear and make them sell.

The size of this drop is a big red flag. It now shifts odds, with continuation to new highs unlikely in the near term. Most likely scenario is for price to now tighten up in a range (called an equilibrium - higher lows, lower highs). Wait for the breakout for longer term direction.

I reiterate my previous comment that in my view it isn’t a successful strategy buying late into a weekly rally that hasn’t seen a weekly trend change. You either have your stop below the previous low (poor risk/reward) or at some arbitrary level to get a better risk/reward. The problem with the latter is that you know a weekly higher low is most likely and you’ll probably get stopped out right at it. If you want in on weekly rallies then you buy for the daily trend change and then let her run.

A wee tip… a good time to buy a weekly higher low is when daily RSI is oversold.

thanks again JTH. Where can I see and know about daily RSI to know when it is oversold. Could you message me when it gets to that point please ;)

also I don't know what you mean by a weekly higher low. I thought on the recent 2 month rally ATM just had, that each week that was passing was having a higher low than the previous week before, up until it got to around 7.7. I am not quite understanding understanding what you mean by this.

cheers mate and hope you have a great ski trip, don't break a leg!

[Balance]

Most number of tourists in Japan come from China ...Most money they spend too

Most Japanese stuff bought by Chinese

I visited Japan on a guided tour and was told by a very experienced Guide ...that most Japanese resent chinese tourists and their poor manners but out of politeness bear them ...also maybe for their money

Rich Chinese seems to have forgotten the past in embracing and enriching Japan !!!

The rich Chinese are spending everywhere - not just in Japan.

Does not mean China has forgotten or embrace Japan, just as they have not embrace NZ because they make up NZ's second biggest tourist numbers and buy the most of NZ products!

Relevance to ATM is that geopolitical tensions are not conducive to trade & profitability.

[Maxtrade]

The rich Chinese are spending everywhere - not just in Japan.

Does not mean China has forgotten or embrace Japan, just as they have not embrace NZ because they make up NZ's second biggest tourist numbers and buy the most of NZ products!

Relevance to ATM is that geopolitical tensions are not conducive to trade & profitability.

Up 4.4% today, do large volume traders just play pump and dump with ATM. Stocks have become even more irrational than ever since the pandemic. Nothing positive has changed overnight for ATM yet there seems to be quite high buy volumes and fewer sellers??

[Old mate]

Traders must be loving this. Bit scary for me:mellow:

[Balance]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/376499/351334.pdf

MVM acquisition completed - $268.5m less from cash reserves with a further $120m to be invested = $388.5m.

Adding fixed asset base to a low cost, flexible and variable business model - not a great idea imo. Why buy the cow when you can buy the milk?

Doubt there will be a share buyback of any meaningful quantum when results are announced in August with the reset strategy requiring a much much higher level of advertising, promotion and distribution spend to offset loss of sakes from the low cost daigou channel?

Next stop on sp - A$5.50?

[winner69]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/376499/351334.pdf

MVM acquisition completed - $268.5m less from cash reserves with a further $120m to be invested = $388.5m.

Adding fixed asset base to a low cost, flexible and variable business model - not a great idea imo. Why buy the cow when you can buy the milk?

Doubt there will be a share buyback of any meaningful quantum when results are announced in August with the reset strategy requiring a much much higher level of advertising, promotion and distribution spend to offset the low cost daigou sales.

Next stop on sp - A$5.50?

Agree with you …owning stainless steel will lower overall returns on capital …and prob a drag on shareprice even if A2 goes back to its former glory.

[Master98]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/376499/351334.pdf

MVM acquisition completed - $268.5m less from cash reserves with a further $120m to be invested = $388.5m.

Adding fixed asset base to a low cost, flexible and variable business model - not a great idea imo. Why buy the cow when you can buy the milk?

Doubt there will be a share buyback of any meaningful quantum when results are announced in August with the reset strategy requiring a much much higher level of advertising, promotion and distribution spend to offset loss of sakes from the low cost daigou channel?

Next stop on sp - A$5.50?
Goldman Sachs retained its neutral rating and A$6.96 price target on a2 Milk shares.

[Balance]

Results will be after a tug of war between DB & the BOD to present the worse (DB) vs the justification (BOD).

DB will win hands down - BOD has no credibility left in the capital markets.


Goldman Sachs retained its neutral rating and A$6.96 price target on a2 Milk shares.

https://www.fool.com.au/2021/07/30/own-a2-milk-asxa2m-shares-here-is-its-fy-2021-result-preview/

A2 Milk Company Ltd (ASX: A2M) shares will be on watch next month when it releases one of the most highly anticipated results of reporting season.

Ahead of the release, I thought I would look to see what the market is expecting from the embattled fresh milk and infant formula company.

What is the market expecting?

The last 12 months have been very tough for a2 Milk, leading to countless earnings guidance downgrades. In light of this, expectations are very low for its result in August and this has been reflected in the performance of a2 Milk shares over the period. Since this time last year, the a2 Milk share price has lost a whopping 70% of its value.

According to a note out of Goldman Sachs, its analysts are forecasting revenue of NZ$1,221.1 million in FY 2021. This represents a 29.5% year on year decline and is at the low end of the company’s last revised guidance of NZ$1.2 billion to NZ$1.25 billion.

Goldman explained: “We forecast the key decline to come from the ANZ division driven by continued impact on the Daigou channel with sales at NZ$573.1mn (-40.7% yoy). We expect direct sales into China/other Asia to also be down -18.2% to NZ$572.0mn.”

In respect to earnings, Goldman expects the company to achieve its revised EBITDA guidance of NZ$132million to NZ$150 million. It is forecasting EBITDA of NZ$140.7 million, down 74.5% year on year.

Finally, on the bottom line, the broker expects a2 Milk to reported a 74.7% decline in underlying net profit after tax to NZ$98.1 million.

Will it pay a dividend?

While the company has suggested that it could consider capital returns, Goldman Sachs isn’t expecting this to be the case in FY 2021.

It commented: “While we forecast operating cash flow to be down -87.5% to NZ$53.5mn, we expect capital expenditure for FY21 to increase significantly to NZ$50mn vs. NZ$5.8mn in the prior year. We do not expect the group to pay final dividends and expect it to maintain a net cash position of NZ$806mn at the end of June 2021.”

Are a2 Milk shares in the buy zone?

The note reveals that Goldman Sachs continues to sit on the fence with a2 Milk. It has retained its neutral rating and $6.96 price target on a2 Milk shares. Based on the current a2 Milk share price, this implies potential upside of 13% over the next 12 months.

As attractive as that potential return may be, Goldman doesn’t appear to believe the risk/reward on offer with a2 Milk shares is compelling enough to upgrade its shares to a buy rating.

[aperitif]

https://www.foodnavigator-usa.com/Article/2021/08/03/The-a2-Milk-Co-US-CEO-This-is-going-to-be-a-very-significant-segment-of-the-dairy-category

[Snoopy]

https://www.foodnavigator-usa.com/Article/2021/08/03/The-a2-Milk-Co-US-CEO-This-is-going-to-be-a-very-significant-segment-of-the-dairy-category


I thought the branding of the new US market product is unfortunate. The whole selling point of A2 is its purity (it contains just A2). 'Half and Half' means half A2 and half - what? If the answer is A1 then what they are promoting is just regular milk! I had to search on the net to see the branding meant 'half cream' and 'half milk'. That wasn't on the large print on the carton. It sounds a bit like the old 'silver top' which back in the day was just regular milk (before the days that the general public knew about A1 and A2).

SNOOPY

[Rawz]

I thought the branding of the new US market product is unfortunate. The whole selling point of A2 is its purity (it contains just A2). 'Half and Half' means half A2 and half - what? If the answer is A1 then what they are promoting is just regular milk! I had to search on the net to see the branding meant 'half cream' and 'half milk'. That wasn't on the large print on the carton. It sounds a bit like the old 'silver top' which back in the day was just regular milk (before the days that the general public knew about A1 and A2).

SNOOPY

I think you will find the yanks know 'half and half' means half milk and half cream. That is their terminology.

Much like if I told you KFC was 'choice as bro' you would know to dive in and eat a bucket of it. But a yank would have no clue as to what I was saying.

Reminds me of a trip to Canada I went on many many years ago. Everyone was drinking Bud Light and Coors Light. I was wondering why they all wanted the low alcohol beer because back home in NZ we could get Steinlager light which was 2% low alcohol beer. But in North America 'light' meant low carb.. not low alcohol.

[Leftfield]

Agree Rawz, Americans know exactly what Half and Half means..... it is not intended for Kiwi consumption.

Coffee creamers and Half and Half all the go in USA they say.

More on the purchase of MV (https://www.stuff.co.nz/business/farming/125964190/new-jobs-and-laboratory-proposed-at-mataura-valley-milk)M FYI.

[Balance]

https://www.foodnavigator-usa.com/Article/2021/08/03/The-a2-Milk-Co-US-CEO-This-is-going-to-be-a-very-significant-segment-of-the-dairy-category

ATM is yet another NZ company which thinks it can make it big in the US - by pumping in heaps of cash (made from existing operations) to build up and buy sales revenues.

They all forget that the US is the most competitive (and arguably the most efficient) market in the world to operate in.

[Leftfield]

Now ATM owns MVM only fair to compare.

SML currently trading at PE of 12.54 and EPS of 29.66
ATM currently trading at PE of 14.59 and EPS of 43.39

ATM was once an underdog in Australia making losses. It is now profitable, while selling at a premium with an enviable market share. ATM repeatedly say that the USA is following the same early trajectory as Aus. Way to early to write off ATM in USA IMHO.

[Sideshow Bob]

Given past years timing FY21 result could be out end of next week.

No doubt DB will be sweeping all the cobwebs out of the cupboards!! :scared:

[winner69]

Given past years timing FY21 result could be out end of next week.

No doubt DB will be sweeping all the cobwebs out of the cupboards!! :scared:

Paper says Thurs 26th

[X-men]

Need beagle to buy in...lol

Atm is more healthier than ZEL..no smoke

[Newman]

Add Milk Powder to Long List of Stocks Facing China Policy Risk
Bloomberg News
Dairy products manufacturer China Feihe Ltd. led losses in the sector on Friday, slumping as much as 9.3% in Hong Kong after the Xinhua News Agency reported that some experts are concerned by marketing that is making mothers choose milk powder over breastfeeding.

[Ggcc]

06:10p.m. Trade in A2M.6K9 @ 3:38:04 TSN# 1140434867 Cancelled (ETR)
06:01p.m. Trade Under Investigation in A2M.6K9 @ 03:38:04

What does that all mean on ASX

[Leftfield]

Things finely balanced for the next trading update.

In China HC poster advises "422 new Mother & Baby stores added in last 4 weeks." Total M&B Stores "up 50% from last revised FY 21 update."

Meanwhile interesting update on USA progress.... Apologies if its been posted before. Here it is. (https://www.foodnavigator-usa.com/Article/2021/08/03/The-a2-Milk-Co-US-CEO-This-is-going-to-be-a-very-significant-segment-of-the-dairy-category)

As always DYOR and take care.

[dreamcatcher]

Things finely balanced for the next trading update.

In China HC poster advises "422 new Mother & Baby stores added in last 4 weeks." Total M&B Stores "up 50% from last revised FY 21 update."

Meanwhile interesting update on USA progress.... Apologies if its been posted before. Here it is. (https://www.foodnavigator-usa.com/Article/2021/08/03/The-a2-Milk-Co-US-CEO-This-is-going-to-be-a-very-significant-segment-of-the-dairy-category)

As always DYOR and take care.

Certainly is finely balanced and I'm watching with great interest.

[Master98]

https://www.fool.com.au/2021/08/10/a2-milk-asxa2m-share-price-rises-on-bullish-broker-note/
another bullish broker Bell Potter retained its buy rating and A$8.5 target price.

[Maxtrade]

Things finely balanced for the next trading update.

In China HC poster advises "422 new Mother & Baby stores added in last 4 weeks." Total M&B Stores "up 50% from last revised FY 21 update."

Meanwhile interesting update on USA progress.... Apologies if its been posted before. Here it is. (https://www.foodnavigator-usa.com/Article/2021/08/03/The-a2-Milk-Co-US-CEO-This-is-going-to-be-a-very-significant-segment-of-the-dairy-category)

As always DYOR and take care.

Pretty large volume on the buy side today pushing SP up over $6. Was there some news I missed today?

Or is this likely to be just another push followed by a sell off again dropping back down to the 5.8's. Thoughts anyone?

[Leftfield]

Pretty large volume on the buy side today pushing SP up over $6. Was there some news I missed today?
Or is this likely to be just another push followed by a sell off again dropping back down to the 5.8's. Thoughts anyone?

No news, although I note shorts are also decreasing and the Bell Potter BUY rating. I'm still happy holding and believe there is considerably more upside potential versus downside. Looking forward to the next update.

That said.... why ask me?...what do I know?..... Crikey, I chose ATM in the 2021 stock picking comp and am currently languishing at bottom of the comp!!

GLH.

[aperitif]

MVM, a2 and Synlait all posting new jobs today on LinkedIn.

Synlait currently have 13 positions available(7 Dunsandel)

MVM; Senior IT systems business analyst(Invercargill)

a2; National Account Manager(Melbourne)

Have a great weekend

[ralph]

Obviously left wing views Essential in Dunsandel:D

[bottomfeeder]

No news, although I note shorts are also decreasing and the Bell Potter BUY rating. I'm still happy holding and believe there is considerably more upside potential versus downside. Looking forward to the next update.

That said.... why ask me?...what do I know?..... Crikey, I chose ATM in the 2021 stock picking comp and am currently languishing at bottom of the comp!!

GLH.

Maybe we may have seen the bottom of the SP. I hope I just got in at the bottom.

[BlackPeter]

Maybe we may have seen the bottom of the SP. I hope I just got in at the bottom.

Hmm ...

I must admit my guess what might happen with ATM share price is as good as yours, so just some spontaneous thoughts related to your post:

They say "hope dies last", but they say as well "hope is no investment strategy".

"We may have seen the bottom of the SP" - this sentence is true after any wee dip (no matter what the SP), but the statement "we well might not have seen the bottom of the SP" is as well always true (unless the SP is NIL), and more likely to be correct than the first statement if the SP is in a downtrend.

This share is currently (as the chart shows) clearly in a downtrend.

Just connect the dots ...

12834

[X-men]

Go to HC... anyone can draw beautiful chart as well as nasty chart... depends on how u draw it...lol

[Leftfield]

Maybe we may have seen the bottom of the SP. I hope I just got in at the bottom.


Hmm ...

This share is currently (as the chart shows) clearly in a downtrend.

Just connect the dots ...

12834

'Picking a bottom' is an over-rated idea IMHO. If you are wanting to buy into the ATM story it is much wiser to wait for a 'golden cross' signal and buy into a firm uptrend. The difference in 'finding a bottom' and a firm uptrend can be several years and the % gain between 'the bottom' and the safety of a 'golden cross' is not that great in the overall scheme of things. (Check out TA on PEB as a classic example.)

Disc- I hold ATM as a sentimental (free held) favourite at 10% of my now much better balanced portfolio, while I've also sold down ATM and achieved 6 figure (life changing) realised gains..... so very much different strokes for different folks. You just got to DYOR and take responsibility for your own decisions..... it's all about learning.

That said, I hope you are right BF! Interesting time as we wait for the next update.

[Hoop]

Go to HC... anyone can draw beautiful chart as well as nasty chart... depends on how u draw it...lol

Yes agree, depends on how u draw it :D

12839

[X-men]

The Australian paper just wait suitors weight A2m

[Master98]

https://www.google.co.nz/amp/s/amp.theaustralian.com.au/business/dataroom/suitors-weigh-options-as-a2-milk-prepares-to-report-earnings/news-story/702c128d38bb1642b5b2a06dbed489a1
Suitors weigh options as A2 Milk prepares to report earnings

[Leftfield]

Yes agree, depends on how u draw it :D

12839

:t_up: :t_up::p

[Leftfield]

SP rising on speculation of a takeover..... this extract from the Australian.

Suitors weigh options as A2 Milk prepares to report earnings
It may not just be investors looking on at A2 Milk’s annual results on August 26 – suitors may be paying careful attention as well.

There has been talk out of Europe that Swiss multinational Nestle has been keeping a close eye on the company, but most think a suitor will only move after A2 reports its annual results.

A2 has a market value of about $4.35bn.

[JohnnyTheHorse]

Looks like bit of a short squeeze driving the price. Will be really surprised if it can hold these levels into the afternoon, but let's see!

[Ggcc]

SP rising on speculation of a takeover..... this extract from the Australian.

Suitors weigh options as A2 Milk prepares to report earnings
It may not just be investors looking on at A2 Milk’s annual results on August 26 – suitors may be paying careful attention as well.

There has been talk out of Europe that Swiss multinational Nestle has been keeping a close eye on the company, but most think a suitor will only move after A2 reports its annual results.

A2 has a market value of about $4.35bn.
That would screw all those shorters

[X-men]

well..it is all depends on how u draw the chart...hahahha

[Master98]

Looks like bit of a short squeeze driving the price. Will be really surprised if it can hold these levels into the afternoon, but let's see!
"takeover" premium will build into price gradually.

[couta1]

That would screw all those shorters Long overdue for that to happen and to feel some pain, bring it on i say.

[Hoop]

well..it is all depends on how u draw the chart...hahahha
Yep and be able to put one's money where their chartist mouth is...for me the chart has triggered medium term buy signals, so here I go again....maybe this time will be a happier venture.
Disc: back in

[Master98]

Yep and be able to put one's money where their chartist mouth is...for me the chart has triggered medium term buy signals, so here I go again....maybe this time will be a happier venture.
Disc: back in
hope you are right this time Hoop:t_up:

[Hoop]

hope you are right this time Hoop:t_up:
So do I :mellow:....but as they say the more often you do it the more chance of getting it right once.:cool:

[Maxtrade]

Up 14%! Why the sudden extreme jump higher?

[winner69]

Up 14%! Why the sudden extreme jump higher?

Takeover at 11 bucks next week maybe

You need to read this thread …or the papers ….never mind ….get in now …heaps more to be made

[aperitif]

Post from March…..These talks would have been going on for a while now, GS will be assisting ATM(They hold ~5%)


A2M Takeover Target/Strategic Acquisition?

These are my notes and intended for my research purposes only

a2 is currently out of favour and has been punished by the market for a few reasons; management selling, lack of transparency re daigou/inventory/pricing, EBITDA margins, fourth downgrade, new CEO, stronger NZD, JH debacle, China tensions etc

Large multinational brands are struggling to sell infant formula into China and a2 will now be on their radar. Nestle, RB and Danone all mentioned in their earnings calls they are actively on the hunt for M&A opportunities as they are struggling to differentiate…

Rationale

· Li Xiao(China CEO) previously worked for Multinationals
· New Chinese board member (Bessie Lee)
· Board/Management haven’t bought(privy)/sold, PN has 800,000 shares expiring on 12 May 2021…
· New CEO David Bortolussi has a strong background in the consumer goods industry. He transformed Pacific Brands to be acquired by Hanesbrands where he took up the role as MD…
· CFO Race Strauss – 20 years at Unilever Australasia responsible for M&A etc
· No share buyback(privy)
· MVM acquisition – Supplier and geographic diversification, CAHG retain 25% interest and acquirer will get access to a world class facility in NZ
· Deep and long lasting relationship with China State Farm
· Key China Registrations (Dunsandel/MVM down the track)
· China Label is selling at ~40% pcp!
· Diversified into UHT Smart Nutrition and Full Cream 200ml offerings
· Institutions still holding a fair chunk of the register
· Stock price is trading at a two year lows

Nestle - Good strategic fit?

· Their a2 offering has had poor uptake in China, a potential scenario could be Nestle cease all a2 sales and take a strategic stake in a2(~15%) utilizing their large distribution network to push sales. Similar to when Coke purchased a stake in MNST.
· Starbucks/Nestle relationship. Oatly just signed nationwide distribution(USA) a2 something similar???
· Manufacturing capability and product innovation in the US

Interested to hear others thoughts. I have a few more notes regarding comparable valuations/premiums for those interested!

[aperitif]

12846

Takeover would seem unlikely, strategic stake(10-20%) seems a far smarter capital approach. It should put a nice floor in the SP. Can’t see the NZ OIO allowing a full takeover, potentially in time.

GS helped them with the Fonterra strategic acquisition(rolling three year term) in 2018….three years later…..

We all know what happened to Vocus:t_up:

[winner69]

Post from March…..These talks would have been going on for a while now, GS will be assisting ATM(They hold ~5%)

GS Corporate Advisory and A2 been in love for years …..met Babidge in lift heading up GS office years ago ……been lucrative for GS I reckon

GS broking / funds side don’t talk to Corporate side ….no inside info …..that’s what they say

[aperitif]

This will also explain who Synlait’s new Multinational customer is from 2023, beneficial for all parties. Strategic masterclass, with the MVM acquisition. The Coca Cola (16.7%) acquisition of Monster Beverage added rocket fuel to their business & share price. Shorters will have no desire to hold now with impending corporate activity/ and the future when Nestle locks up ~15%.

12847

https://investors.monsterbevcorp.com/static-files/3361a24e-dbed-4a8e-a054-1420712a8922 (https://investors.monsterbevcorp.com/static-files/3361a24e-dbed-4a8e-a054-1420712a8922)

[Maxtrade]

Sounds like it was just one newspaper with an substantiated comment. Nothing more than a speculative possibility. But the market reaction was pretty strong as though there must be something definitive behind it? Interesting how influential the media can be even with one article. Unless I am incorrect and have missed something more substantiated than the comment in the Australian?

[alokdhir]

Normally price action of this kind ...ie with huge volumes ...is based on some firm inside news ...after seeing the overall trading ...I will bet on something concrete coming out of this in next few weeks

Its worth a buy now ...max downside is $ 6 ...upside potential of $ 11 in next 3 months ....IMHO

Risk / Reward favouring the brave ....suddenly its golden cross will also appear to lend further legs ...:D

[Blue Horseshoe]

I would say they are waiting for the results to come out, share price will plummet and then they will make their move, sub $5.00

[JohnnyTheHorse]

I think this is largely shorts being squeezed out based on the price action in the first hour. I am surprised it had the momentum and closed near the highs, which may mean longer term shorts are continuously covering. If big money is serious about this they will gap it up on open tomorrow and really crush them. Let's see what happens.